Jupiter’s Mark Nash Loads Up on Gilts in Wager BOE Will Slash Rates

(Bloomberg) — Jupiter Asset Management’s Mark Nash has seized on a surge in UK government yields, loading up on the debt in anticipation that the Bank of England will cut interest rates more than the market currently expects.

“We are very long gilts and short the pound,” said Nash, the lead investment manager of the $672 million Jupiter Strategic Absolute Return Bond Fund, in an interview. “There should be at least four more cuts priced in.”

Nash joins a growing band of investors who have turned constructive on UK bonds with an eye on more BOE easing and after yields spiked to multi-year highs earlier this month. Money-markets are currently pricing 66 basis points of rate reductions by year-end, up from 37 basis points a week ago.

He’s been buying gilts across maturities over the last week and a half, encouraged by cooling inflation, a calming of the global bond selloff, and UK Chancellor Rachel Reeves’ pledge to cut spending if borrowing costs resume their advance.

Still, any signs of further weakness in the government’s fiscal situation could see the retreat resume. The UK’s government bond market was among the worst hit in the bond rout at the start of the year, prompting billionaire investor Ray Dalio to suggest Britain is at risk of a “debt death spiral.”

Nash’s fund returned 0.9% in 2024, with a cumulative return of 21.7% over the last five years. That compares with 5.3% and 12.9%, respectively, using the US overnight Fed rate as a benchmark.

He maintains a short position in the pound, predominately versus the Japanese yen, which he predicts will be supported by a Bank of Japan interest-rate hike on Friday.

“Inflation has already started to have another notch down and the central bank will be gagging to cut rates in order to support to economy,” he said. “On a relative basis, the pound should drop versus other currencies.”

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