Commenting on the Bank of England gilt sale operation taking place today, Elaine Torry, Co-Head of DB investment says:

“Today’s planned sale of gilts from the Bank of England comes after a tumultuous period for UK financial markets, with numerous government changes and fiscal challenges being presented at rapid speed. It’s difficult to anticipate how the market will react to the Bank of England’s actions as the landscape of the field that investors, most notably UK defined benefit pension schemes, are operating in has changed quite dramatically since the original planned date for the sale. One of the big determinants of the outcome of the sale will be whether defined benefit pension schemes, who are one of the biggest holders of government bonds, are ready, willing and able to step back into the gilt market as a buyer of these gilts.

“As we await details of the full fiscal statement, which we hope will provide reassurance to the market, today’s sale of gilts from the Bank of England introduces a real risk that yields will increase once again. Markets and investors are still scarred from recent turmoil, and as many pension schemes seek to consolidate and review their investment strategy they could, in the short term at least, be faced with a further round of investment decisions.”