UK bond yields rise to 5.6%, sparking 'memories of 2022 pension crisis'
Tariff concerns are adding to market volatility as borrowing costs soar.
James Van Straten | Edited by Omkar Godbole, Parikshit Mishra Updated April 9, 2025, 1:06 PM Published April 9, 2025, 11:52 AM
What you need to know:
- Yields on 30-year UK government bonds have risen to 5.6%, the highest since 1998, renewing fears about pension fund instability seen during the 2022 LDI crisis.
- Trump's proposed tariffs are shaking bond markets, threatening to trigger a new round of financial stress.
- According to Bytree founder Charlie Morris, Bitcoin could become an asset for diversification in portfolios amid the global rise in bond yields.
Yields on 30-year UK government bonds rose to 5.6% on Wednesday morning, the highest since 1998, reflecting a broader rise in US sovereign yields and raising fresh concerns about financial market stability.
Rising global bond yields are putting significant downward pressure on risk assets. Since the U.S. stock selloff began last Thursday, the Nasdaq is down 10%, while Bitcoin (BTC) has fared slightly better, down 8% over the same period.
At the same time, the yield on 30-year UK bonds increased by 8%, and 30-year US bonds by 12%. Charlie Morris, the founder of ByteTree, believes that investors will start to look for diversification into other assets, including Bitcoin.
“The UK seems to have been living beyond its means for too long. It hasn’t balanced its budget since 2001 and the gilt market is tired,” Morris said. “Investors looking for diversification from financial assets will be buying bitcoin as well as gold.”
The sharp rise in yields has brought back troubling memories of the UK pensions crisis of 2022, when a sudden rise in borrowing costs nearly caused the financial system to collapse, ultimately costing then Prime Minister Liz Truss her job.
The latest bond market disruption comes as uncertainty over global trade is growing, fueled by President Donald Trump’s proposed tariffs. The tariffs could disrupt global supply chains and increase costs, adding to pressure on already strained markets.
“Unfortunately, in politics, you will never get what you want by making civil arguments based on high principles,” former U.K. MP Steve Baker told CoinDesk in an exclusive interview. “President Trump claims to be using economic brute force — and he is. It’s time to rediscover free trade, both at home and abroad, quickly, before this chaos destroys our future.”
The recent rise in yields echoes events in 2022, when the surprise mini-budget announcement on September 23 sent government bond yields soaring, sent the pound plunging and exposed serious vulnerabilities in the UK pension system.
Many defined benefit pension schemes have adopted complex liability-driven investment (LDI) strategies, using leverage and derivatives to meet long-term commitments. But as returns have risen, these funds have suffered huge mark-to-market losses and are facing claims
Источник
