Tim Price: In a normal market, maybe. But not in this one
UK base rate squats at 0.5 per cent, its lowest level in history — or since the formation of the Bank of England in 1694, which is much the same thing. With sporadic signs of inflation and patchy evidence of recovery, plus a new broom at the Bank of England who is expected to be boldly interventionist, the financial chatterati are transfixed by the prospect of the ‘Great Rotation’. This much-anticipated shift out of UK government gilts, and bonds more generally, back into equities reflects expectations that bond prices are due for a fall because interest rates must inevitably rise, while shares are overdue for an upswing. There’s only one problem with this thesis.