Shorter Notices FINANCE AND INVESTMENT
By CUSTOS
THESE are brave stock markets ; indeed some of the cynics dub them foolish. With a war still in its infancy, a 7s. 6d. income-tax—and possibly a higher rate—in early prospect and a borrowing programme of at least a cool £I,000 mil- lions a year to be carried through, the gilt-edged market is in the throes of something very like a boom. As I hinted last week, investors in fixed-interest securities should not be in any hurry to sell. This recovery has now acquired real momentum, and I shall not be surprised to see it go a good deal farther yet. At last the banks have come in as buyers, there is moderate support from the individual investor, the top-hatted brigade give the movement tone by taking their odd £5o,000 or LI oo,000 just for a few points run, and as nobody seems at all anxious to sell, hey presto, the boom is on.
Whether the Treasury will add fuel to the flames by reducing the Bank rate I will not attempt to forecast. True enough, the official minimum is out of touch with open market rates, but that in itself is not a compelling reason why Bank rate should come down. Within the next few months, possibly weeks, the Government will surely have to start paying some of its debts, and then we must look out for a pretty heavy addition to the weekly offers of Treasury Bills. That may mean that discount rates will stiffen a little, say, to 2 per cent. or more, but even so I do not see why the gilt-edged recovery should not continue. By the same token, I expect to see stock-market prices generally very well main- tained. One of the groups with good scope for improve- ment is home railway prior charges.
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