Key Takeaways: Fixed-income managers believe the Autumn Budget won’t significantly impact markets. A smaller budget deficit would support gilts. Bank of England expected to cut rates further in 2026, boosting gilt prices as yields decrease. Upcoming budget may tighten fiscal policy with tax increases, freezing income tax thresholds, and new property and business taxes, negatively impacting GDP growth without triggering a recession. Most managers view gilts favorably pre-budget, expecting lower growth and more interest rate cuts. Funds like Fidelity MoneyBuilder Corporate Bond Fund see budget as supportive for gilts, with higher taxes reducing growth and inflation. Allianz Gilt Yield Fund holds overweight position in gilts, believing tax measures boosting government revenue are positive for gilts. Jupiter Strategic Bond Fund cautiously optimistic about budget, expecting fiscal tightening and softening labor market to prompt Bank of England rate cuts. Royal London UK Government Bond Fund retains overweight in shorter maturity gilts, expecting poor economic performance amid tax hikes and weakening labor market. JPM Aggregate Bond Fund has overweight in gilts, anticipating Bank of England to cut rates more aggressively due to easing inflationary pressures. Invesco Global Bond Fund (UK) positive on sterling duration, anticipating rate cuts beyond market predictions. BlueBay Global Investment-Grade Corporate Bond Fund neutral on gilts, sees risk of recession due to high tax burden impairing growth.

Read more at Morningstar: Bond Fund Managers Eye Interest Rate Cuts Ahead of the Autumn Budget