Derivatives market: What’s going on with UK LDI flows?

Last year’s rush by UK pension funds to de-risk, either via interest rate and inflation swap overlays or by switches out of equities and into fixed income, was headline-grabbing. Yield curves remain inverted but the headlines have gone. Roger James finds out why.

A version of this article first appeared in Total Derivatives.

Total Derivatives is the prime source of real-time news and analysis of the global fixed income derivatives markets.



The sterling fixed-income market appears to be facing an impasse, particularly at the ultra-long end where two views tend to clash. On one hand is the view that it is “business as usual” in long-dated nominal and real markets, and that flows – including liability-driven investment (LDI)-related flows – will continue to invert both those yield curves.

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