Headlines:

• Investment returns for 2012 on short maturity portfolios is speculated to be low given the low level of bond yields.
• The government announcements in 2011 regarding the short to medium term future of government bonds appears to have been taken in by the market, as reflected by the flatness of the front-end of yield curves for the US, UK, and Germany.
• Whilst with bond yields at historically low rates the downside risks are limited, any stronger than expected economic performance, particularly if accompanied by higher than target inflation indicators, could lead to markets discounting interest rate increases.