UK Pension Fund Selling Stokes Fear Across Bond Markets

Pension funds are now selling US high-grade corporates
Announced end of central bank support has investors nervous

WATCH: BOE Chief Bailey is under pressure to reverse course on his promise to end emergency gilt purchases this Friday. Here’s what economists and bankers think.Source: Bloomberg

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By Neil Callanan and Jack Pitcher

October 13, 2022 at 1:45 AM UTC

Updated on

October 13, 2022 at 4:39 PM UTC

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UK pension funds are dumping assets to meet margin calls as the Bank of England confirmed it will end its emergency bond buying program, with the reverberations being felt everywhere from Sydney to Frankfurt and New York.

In the US, investment-grade corporate bonds are falling, with average prices of around 86 cents on the dollar on Wednesday compared with 90 cents about three weeks ago. UK pension funds have contributed to the selling pressure in recent days, according to one Wall Street trading desk.