BOE Warns Gilt Market at Risk of Spillover Crisis

The Bank of England has issued a warning about the growing risks in the Gilt market. According to the BOE, elevated hedge fund leverage in gilts, combined with exposure to artificial intelligence assets and corporate debt, poses a significant threat to market stability.

The UK 10-year government bond yield is already near levels last seen during the 2008 financial crisis, heightening concerns about potential stress spillovers across markets.

The BOE's quarterly financial stability report notes that 'markets are more vulnerable to strains that crystallise at the same time', increasing the risk of a broader market downturn.