Disclaimer: Views in this blog do not promote, and are not directly connected to any L&G product or service. Views are from a range of L&G investment professionals, may be specific to an author’s particular investment region or desk, and do not necessarily reflect the views of L&G. For investment professionals only.
Solutions chart update: What’s behind the UK’s rising yields?
30-year gilt yields reach 6%. Is there an action for DB schemes?
Bond yields have risen across the board in recent days. Much of investor focus has been on longer-dated bonds, and 30-year gilt yields have breached 6.00% today (1 October). This is the highest level since 1998, having come close to that level on several occasions since mid-September – most notably touching 5.93% on 10 and 15 September, and 5.95% on 30 September.
A global story
The rise has largely been driven by global moves, with 30-year US treasury yields rising to 5.67% – levels last seen in the early 2000s and 30-year bund yields reaching 3.97%, the highest level since 2010.
Notably, UK, US and German swap spreads (the difference between swap rates and government bond yields) have remained relatively stable as yields have risen – the UK 30-year swap spread is now around -68bps and the US 30-year swap spread is now around -66bps.
This suggests the move has been driven primarily by higher expected policy rates in response to the environment of high energy prices and continued robust growth, particularly in the US. Fiscal sustainability concerns are not the primary focus at present in our view.
Issuance issues
One contributing factor behind higher global yields has been the significant increase in long-dated corporate bond issuance from technology hyperscalers financing AI-related investment, adding to the supply of duration that investors are absorbing.
The AI-related net issuance in the US across IG and high yield is currently running at around 45% of total supply (source: Goldman Sachs) while the Bank of England recently noted that AI hyperscalers in sterling credit markets accounted for 47% of GBP corporate bond issuance so far this year.
In addition, 30-year gilts have outperformed 30-year treasuries by around 25bps from the start of September 2026 as US yields rose 39bps versus 14bps for comparable gilts over the same period.
DB implications
We have seen some clients express interest in increasing hedge ratios at these yield levels, particularly pension schemes that remain open to future accrual and therefore continue to have growing liability exposures.
Recommended content for you
Learn more about our business
We are one of the world's largest asset managers, with capabilities across asset classes to meet our clients' objectives and a longstanding commitment to responsible investing.
