Bank of England steps in again to steady markets
“I’m not aware of the details of exactly what’s happened this morning. The short briefing message I’ve had from Treasury is that it’s a technical financial stability.”Bonds are IOU notes that the government uses to borrow money and pay a fixed amount in interest.
Government bonds are called GILTS and are bought and sold by investors, including pension funds, who like them because they are usually fairly stable, long term investments and help cushion them from interest rate volatility.People pay attention to the YIELDS - the amount of interest on the bonds which is described in % terms - because this shows investors’ confidence in them.
The BoE said: "These additional operations will act as a further backstop to restore orderly market conditions by temporarily absorbing selling of index-linked gilts in excess of market intermediation capacity."As pension savings are a long term investment there is time to ride out any market falls, as they bounce back in time - for example, from the global financial crisis and the Covid pandemic.the value of overseas investments when converted back into sterling will receive a boost.
“This should settle down but final salary scheme trustees have been urged to keep the resilience of their investment strategies under close review.”
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