Bank of England warns gilt leverage as 10-year yield nears 2008 levels

  • Bank of England warns hedge fund gilt leverage and asset exposures could spread stress across markets.
  • UK 10-year government bond yields are near levels last seen during the 2008 financial crisis.
  • Bank of England’s quarterly financial stability record highlights risks crystallising simultaneously.

The Bank of England warned that elevated hedge fund leverage in gilts, exposure to artificial intelligence assets and corporate debt could allow financial stress to spread across markets. Its quarterly financial stability record said markets are vulnerable to strains that crystallise at the same time, while the UK 10-year government bond yield is already near levels last seen during the 2008 financial crisis.

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