Investors Urge BoE to Ease Off Bond Sales to Stabilize Yields

Back

15.10.2025

With 30-year gilt yields near levels last seen in the 1990s, the Bank of England’s plan to keep selling bonds has sparked pushback from some of the world’s largest asset managers. Their argument is simple: the central bank is flooding an already fragile market. Will the BoE listen or a policy designed to restore normality end up pushing the market into new turmoil?

Last week brought striking headlines in the U.K. bond markets: major asset managers overseeing over $1.5 trillion in assets publicly called on the Bank of England (BoE) to suspend its gilt (sovereign bond) sales program. They argued that the BoE’s active quantitative tightening is deepening stress in gilt markets, pushing yields higher, and increasing costs for taxpayers. As Reuters reports, the fund managers contend that gilt values have already been depressed by inflation and fiscal concerns, and that the central bank’s selling into fragile markets is making matters worse.

The strength of their argument is underpinned by recent market moves. According to the same coverage, gilt yields have moved as much as 70 basis points above where they might have been in the absence of active sales, a distortion that many see as out of line with equivalent U.S. or eurozone sovereigns.

The BoE has already reacted somewhat: in mid-September, it announced a slower pace of quantitative tightening, trimming target gilt sales from £100 billion per year to £70 billion, and deliberately skewing the mix away from long-dated gilts. Still, critics argue that this step is only marginal and does not go far enough to stem market volatility.

Behind these tensions lies a broader dynamic: the U.K. is now borrowing at some of the highest long-term rates in the G7. The 30-year gilt yield in recent months has been reported at around 5.6%-5.7 %, levels not seen since the late 1990s. That high yield reflects major stress across fiscal outlook, inflation expectations, and supply pressures. The combination of rising yields and active bond sales has formed what many label a “doom loop” - where increased yield costs force more borrowing, which in turn triggers further bond issuance into a challenged market.

Bondfish opinion

For retail bond investors, the managers’ plea and the market data point to a potentially interesting tactical window. If gilt yields are being artificially elevated by central bank supply pressure, a halt or further slowdown in sales could help relieve upward pressure on yields - driving prices higher. But that is not guaranteed. The risks are real: fiscal surprises, inflation shocks, or disappointing budget announcements could quickly reassert control of direction. If one were to act, a cautious approach - modest exposure to longer-dated gilts or gilt-focused funds, with active monitoring and exit flexibility - may be the most prudent way to try to capture potential upside if the BoE eases off its selling.

This article does not constitute investment advice or personal recommendation. Past performance is not a reliable indicator of future results. Bondfish does not recommend using the data and information provided as the only basis for making any investment decision. You should not make any investment decisions without first conducting your own research and considering your own financial situation.

Readings

Bondfish opinion