Gilt yields on long-dated UK gilts have fallen back after US president Donald Trump announced a pause to additional tariffs on countries that were willing to negotiate with the US.
Yesterday (9 April), the yield on 30-year gilts rose to their highest level since the 1990s amid the turmoil in global markets and a sell-off in US Treasuries – reaching 5.675% before closing at 5.600%. This morning yields fell back, trading at 5.374% at 10:30am.
Yields on shorter-dated paper had not risen as much over the past week. Yields reached over 4.8% yesterday, the highest since the highs of around 4.9% set in mid-January. Today (10 April), yields had fallen back to around 4.665% by 10:30am.
Insight Investment head of solution design Jos Vermeulen said defined benefit (DB) schemes had entered the tariff storm in a position of strength – noting its estimates suggested that the impact on schemes has been "muted so far".
He said: "This is because of the widespread de-risking that has taken place throughout the DB world over the last two decades. These portfolios are designed to withstand turbulent conditions and portfolios have low exposure to risk assets. Governance practices were also enhanced after the gilts-crisis.
"As such, the healthy surpluses built up in this sector can be expected to remain that way, despite these conditions, which demonstrates the resilience of the DB system and its potential as a source of strength for rest of economy."
