Wondering if anyone can assist in my apparent lack of understanding of the current UK Gilts situation, and/or what I'm doing wrong in my calculations.
There's much chatter in the press etc. about the current UK Gilt yields being higher than after the Truss mini-budget etc. so I figured I would get my own nose in the trough and buy some up.
I last looked at this in July 2023 when a particular investment management co. issued data showing a range of gilts offering up to an equivalent higher tax payer yield of ~8% but back then I opted to stay out of it. So my working theory is that if the current situation post-budget means an even higher transfer of debt servicing costs to gilt holders, then I should get aboard that train with my cash holdings and effectively get some cash back from the tax impacts I face - and should be better than holding in my 4.3% cash account which is taxable.
One specific gilt as an example of context is GB00BNNGP668 : Treasury 0.375% 22/10/2026 which is currently available on AJBell at £92.77. But by my Gross Redemption Yield calcs this gives less than 4% at "ask" level and not adjusting for taxation impacts.
However, in 2023 when apparently the gilt yields were lower than now this was priced at £86.34 (according to the data issued by said investment house in their offer) which gave a GRY of 4.85% (obvs because of the lower buy price!)
I'm not looking at a long term horizon here, only in the 1-3 year buckets, but the price data across a number of gilts doesn't appear to stack up to the narrative when these comparing back to 2023.
So I'm stuck trying to work out why the current gilt yield narrative doesn't seem to offer the value I'd expect. What has happened in the overall gilt data set in just over a year that means the average doesn't stack up ? I must be missing something as the graphs on gilt yields everywhere seem to tell the same story.
Any steer or advice welcome. Thanks
