Woolnough: Gilts now best value ever versus bunds

The manager (pictured) of the £22bn Optimal Income fund has employed a negative duration trade in Europe, as spreads between 10-year UK gilts and 10-year German bunds widened to as much as 150bps. "This is the best value you've ever had to own UK bonds vs German bonds," he said. "The 10-year UK yield is now nearly 1.5% higher than German core bonds, and that's attractive to us historically." Woolnough said he is playing the disparity by selling down duration risk in Europe compared to the UK and the US. "We are negative duration in Europe as we think the market is pricing in too...