While he doesn’t expect the pace of tightening to be very steep, Bell does believe that it will be steeper than markets expect.
Speaking to Portfolio Adviser during PA Autumn Congress 2015, Bell said: “I think the US 10-year yield will rise 50 basis points in the next six months or so and we will also see a stronger dollar. The UK economy is actually further along than the US in the inflationary process so i think we will tighten and there is very little priced in the UK for that,”
According to Bell, the implications of that are that gilts sell off, sterling will be strong, and in Europe, where the European central bank is looking to ease further, the peripheral spreads will narrow, particularly after the Spanish elections.”
