BNY clients sell UK debt at fastest pace since mini-Budget crisis, bank says
It reflects slightly stronger UK growth and expectations that the Bank of England will cut rates at a slower pace than other big central banks
CLIENTS at the world’s biggest custodian bank, BNY, sold British government bonds in September at the fastest pace since the UK government bond crisis in 2022, in a potential sign of investor nerves ahead of the new Labour Party government’s Budget later this month.
British bond yields have recently risen compared to those in the eurozone, in part because of concerns about Finance Minister Rachel Reeves possibly changing fiscal rules and increasing spending at the Oct 30 Budget, fund managers said.
The rise in gilt yields – the yields of UK government bonds – also reflects slightly stronger UK growth and expectations that the Bank of England will cut rates at a slower pace than other big central banks.
“UK gilt markets recently faced the most concentrated round of selling by UK and international clients since the mini-Budget of 2022,” said Geoffrey Yu, senior EMEA market strategist at BNY, citing the bank’s iFlow data.
He added custodian clients sold £3 billion (S$5.1 billion) of UK government bonds last month.
“While there can be many reasons for such sales, including changing Bank of England expectations, investor exposures to UK gilts have been reduced heading into the upcoming budget,” he added.
BNY is a custodian of more than US$50 trillion of assets for international clients including pension funds, endowments and other asset managers, and its iFlow data is based on movements in these assets. REUTERS
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