XPS sees gilt market volatility staying elevated amid persistent inflation
TLT•XPS Group said persistent inflation and geopolitical uncertainty are likely to keep gilt market volatility elevated, limiting the benefits of higher yields for pension schemes. UK CPI reached 3.5% in September, while the Bank of England raised its policy rate by 0.25 percentage points to 4%.
1. Gilt market outlook
XPS Group’s Nov. 5 analysis found that higher gilt yields had improved funding levels for many pension schemes. Yields rose sharply through September and early October, while John Healey’s fiscally disciplined Autumn Budget helped reverse some of the increases. XPS said persistent inflation and geopolitical uncertainty are likely to keep volatility elevated.
