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Will the bond bubble burst?

It is probably true to say that Wall Street would have been a far less compelling film if its protagonists, instead of working in glitzy tower blocks on Manhattan, were in fact based at the UK government's debt management office in Philpot Lane. But, as the memory of Gordon Gekko's generation, and the fabulous returns from equities, fades into nostalgia, the hard reality is that for the past 20 years, lending to the UK, or the Germans or the US, has proved to be the single most profitable trading activity for investors, with inflation-adjusted returns of more than 40 per cent.

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By Julian Hofmann,
21 December 2012

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