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Bond markets do not move quickly. They are not inhabited by thrill seekers. However, even their tortoise like reflexes are slower than normal in reacting to a new threat.

The threat has not come out of nowhere. It has been announced, written into bond small print and is launching a consultation process to decide whether to put the “threat” into action in 2025 or 2030.

So what is the threat and who will it effect? DevDosh Ltd is here to explain.

There are approximately £100B worth of special bonds called linkers. They care called linkers because their value is linked to the Retail Price Index (RPI). The retail price index is a measure of inflation commonly used in the UK. It is calculated by the Office of National Statistics by comparing the current costs of essential goods and services to a base year in the past, and working out how much the costs have increased. These bonds have a coupon rate that increases in line with the RPI. So if the RPI goes up then so does the bond yield. These bonds are a staple investment for pension companies that have sold retail price index linked pensions.

The problem is that the RPI tends to over egg the yoke a touch and the current Chancellor believes this is damaging to some members of society. If the RPI is outstripping the true rate of inflation then RPI linked debt is being over charged.

The alternative which is currently being considered is to link debt products to the Consumer Price Index Including Housing as it is deemed to be a more realistic measure of cost of living in the UK.

This is all a slow process being taken over long time horizons. However market impacts are already accumulating. Linkers bond market volatility started in the run up to the RPI divestation announcement and will only increase. The time to cut out is now. Reposition yourself into a product that will work four you before the face value of linkers drops through the floor.

Of course the best place to put your capital to work is with DevDosh Ltd. We offer the safest 10% yield in the UK fixed income investment market, contact us today.