Nomura continues to increase its holdings of UK government bonds, praising them as "the most attractive investment in Europe".

Nomura Asset Management has been heavily buying UK government bonds because their yield is more attractive compared to other European countries. Although UK government bond yields have decreased this month, the yield for 10-year UK government bonds is still around 4.4%, which is appealing to Japanese investors as the yield for domestic bonds of the same maturity in Japan is around 1.6%. Nomura Securities is not the only Japanese asset management company bullish on UK government bonds, as Amova Asset Management also slightly overweights these bonds. Yuji Maeda, the global head of fixed income investments at the $646 billion company, said in an interview in Tokyo, "Within Europe, UK government bonds are the most attractive investment choice, given that UK government bond yields are still higher than German government bonds and investing in the UK seems easier compared to other countries like France." He added that the Bank of England is "not in a hurry" to cut interest rates. This year, Maeda has been increasing Nomura's positions in UK government bonds, investing in 10-year bonds. He pointed out that the worst period in the UK has passed as inflation is decreasing, and the fiscal situation is expected to improve. He said, "The market turbulence we witnessed during former Prime Minister Theresa May's term may have prompted the government to be more cautious in fiscal matters." He also added that an increase in taxes is expected in the November budget, which is a positive signal for investors. The upcoming announcement of spending cuts and tax hikes next month, along with data showing easing inflation in the UK last week, may increase the likelihood of a rate cut. Goldman Sachs economists predict that the Bank of England could reduce borrowing costs as early as next week. Swap traders currently expect the Bank of England to cut rates at least two more times by the end of next year, each time by 25 basis points. While Maeda believes that UK government bonds are attractive in the next 6 to 12 months, he also acknowledges the long-term risks facing the country, including ongoing budget challenges and the continued impact of Brexit. Looking ahead, considering the inflation risks associated with immigration and ongoing issues with fiscal discipline, Maeda said, "I am skeptical about the stability of the UK economy. But in the near term, we favor these yield levels."