The Bank of England has doubled its daily limits on gilt purchases and announced further measures to protect pension funds from market turmoil. Britain's central bank was forced to prop up the government bond market after the mini-budget sparked a sell-off for the pound and gilts, leaving some of the UK's biggest pension funds close to collapse. Pension funds came close to collapse because they bought LDIs to hedge against rising interest rates. But when UK bond yields rise, bond prices fall, leaving pension funds invested in LDIs to face emergency collateral calls to cover their investments. Pension funds struggled to find the cash in such a short time, forcing some to sell gilts, thereby putting further downward pressure on the bond market.

Source: Daily Mail October 10, 2022 23:55 UTC