UK gilt market – special update

In this short note, we look at the current state of the UK gilt market, what has contributed to this and what action pension scheme trustees can take to protect their schemes.

Since the start of 2019, long dated nominal gilt yields have fallen by 0.87% p.a. and real yields have fallen by 0.75% p.a., as illustrated in the chart below. Economic and political factors, both globally and in the UK, are applying downwards pressure to short and long term interest rates.

It is plausible that rates could continue to stay lower for longer with new issues of government bonds still oversubscribed, the economic outlook bleak and an institutional investor aversion to political uncertainty.

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