Bitesize: What might pension funds do when bond yields fall?

Matt Roberts-Sklar

Government bond yields fell sharply mid-2019, especially at longer maturities. For defined benefit pension funds, lower yields tend to mean deficits widen as discounted liabilities increase by more than the value of their assets. How might pension funds respond to this?

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The special relationship: UK and US bond yields

Matt Roberts-Sklar.

Take a look at UK and US 10-year government bond yields over the past few decades and you’d struggle to say which was which. In the words of the FT last year, “The benchmark 10-year Gilt might as well be draped in the stars and stripes”. And even relatively short maturity UK and US bond yields are highly correlated. But what is behind this co-movement and does it matter?

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