Gilt Market Risks Soar Amid Elevated Hedge Fund Leverage

The Bank of England has issued a warning about the risks facing the Gilt market. The central bank stated that elevated hedge fund leverage in gilts, combined with exposure to artificial intelligence assets and corporate debt, increases the likelihood of stress spilling across markets.

This situation leaves markets more vulnerable to strains that 'crystallise at the same time', according to the BOE's quarterly financial stability report. The UK 10-year government bond yield is already near levels last seen during the 2008 financial crisis.