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THOUGHTS ON THE GILT MARKET

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Last week was another quiet week in the gilt market, with prices rallying modestly on the news that Germany had dec...
Last week was another quiet week in the gilt market, with prices rallying modestly on the news that Germany had decided to cut interest rates more sharply than expected, and news that the US Federal Reserve had decided not to raise interest rates.

Domestic figures published during the week also helped maintain gilt market momentum. In particular the latest M4 money supply data. Money supply growth eased from 9.9% in June to 8.8% in July, falling into the government's 3-9% monitoring range for the first time since October last year.

News like this is important to the gilt market because a moderation of money supply growth implies lower inflationary pressures, which in turn is seen as positive for those investing in the gilt market.

The coming week will be very quiet in terms of domestic data, with only the latest trade figures published on Wednesday. As a result the gilt market is most likely to take its lead from developments abroad.
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