Serrari Group

In a dramatic shift, hedge funds are scrambling to unwind their bets against Britain’s £2.5tn government bond market. This comes as growing investor consensus suggests that the Bank of England (BoE) is nearing the conclusion of its rate hiking campaign.

The latest data from S&P Global Market Intelligence reveals that the total value of UK bonds borrowed by investors to wager on price declines plummeted to under £65 billion this week, marking its lowest point since at least 2006. Although it saw a slight uptick after the BoE’s interest rate pause on Thursday, the decline in short positions is indicative of a significant market sentiment shift.

Gilts, which had been the worst-performing leading sovereign debt market in the first half of the year, have recently staged a comeback. An Ice Bank of America index of gilts has risen by 2.7% over the past month, although it remains down by over 3% since the year’s start.

Nikolay Markov, senior economist at Pictet Asset Management, commented, “I think we have reached terminal rates in the UK.” He highlighted softer-than-expected inflation and the absence of anticipated labor market impacts as factors contributing to the shift in sentiment towards long gilts.

The decline in short positions comes as investors anticipate an end to the BoE’s tightening cycle, with markets now pricing in a 60% probability of one more rate rise to 5.5% by early next year.

James Bilson, a fixed-income strategist at Schroders, noted, “We believe the medium-term fundamentals for UK gilts have improved given a weakening growth outlook, a softening labor market, and an improving outlook for domestic inflation.”

While some investors remain cautious due to inflation concerns, the BoE’s decision to accelerate its quantitative tightening program and the shifting economic landscape have led to a significant reevaluation of positions in the UK government bond market.

Photo Source: Google

By: Delino Gayweh
Serrari Financial Analyst
24th September, 2023

Share this article:
Article and News Disclaimer

The information provided on is for general informational purposes only. While we strive to keep the information up to date and accurate, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk. is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information on the website is provided on an "as-is" basis, with no guarantee of completeness, accuracy, timeliness, or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

In no event will be liable to you or anyone else for any decision made or action taken in reliance on the information provided on the website or for any consequential, special, or similar damages, even if advised of the possibility of such damages.

The articles, news, and information presented on reflect the opinions of the respective authors and contributors and do not necessarily represent the views of the website or its management. Any views or opinions expressed are solely those of the individual authors and do not represent the website's views or opinions as a whole.

The content on may include links to external websites, which are provided for convenience and informational purposes only. We have no control over the nature, content, and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorsement of the views expressed within them.

Every effort is made to keep the website up and running smoothly. However, takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.

Please note that laws, regulations, and information can change rapidly, and we advise you to conduct further research and seek professional advice when necessary.

By using, you agree to this disclaimer and its terms. If you do not agree with this disclaimer, please do not use the website., reserves the right to update, modify, or remove any part of this disclaimer without prior notice. It is your responsibility to review this disclaimer periodically for changes.

Serrari Group 2023