Given the yield increases at the announcement of the UK accommodative mini-budget a week ago, pension schemes suffered a massive liquidity crisis related to their leveraged LDI strategies. This drove the Bank of England to temporarily halt Quantitative Tightening.
Yet rather counterintuitively, pension schemes have never been better positioned as their funding levels are higher than ever. This was such a severe event that it certainly contributed to UK Prime Minister Liz Truss’s announcement on Monday 3rd October: she will partially reconsider her government tax cut plan.
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