Market for 30-year gilts steady after BoE intervention

BoE action leads to stabilisation of long-term UK government bond yields

29 September 2022 • 1 min read

Yesterday morning, the bank announced it would intervene in the long-dated UK government bond market - carrying out temporary purchases of UK government bonds in order to "restore orderly market conditions".

It said the purchases would be carried out on "whatever scale is necessary to effect this outcome" and would target conventional gilts with a residual maturity of more than 20 years in the secondary market, initially at a rate of up to £5bn per auction. Auctions would be held daily until 14 October.

The bank's intervention was broadly welcomed by investors as giving 'breathing room' to embattled pension schemes - almost instantly steadying the markets.

The yield on 30-year gilts had risen to just over 5% on Tuesday (27 September) - increasing to 5.077% by 10am yesterday, just before the BoE's announcement. Yields dropped back following the intervention, closing the day at just under 4%.

This morning, yields on 30-year paper remained steady at around 3.9%.

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