Several sectors saw a 25 bps upward trajectory of prime yields in June, with eleven sectors expecting further upward movement in the coming months and no sectors expected to see yield compression in the short term. This moves the average prime yield to 5.80%; almost 100 bps higher than 12 months ago. Despite pricing concerns, this is equivalent to the long-term average.
In June, interest rates reached 5% for the first time since 2008, with the BoE making a 50 bps increase in order to try to curb inflation. Many investors expect rates to increase further by the end of the year and several sectors now look good value, with sentiment for further outward yield movement.
