UK bonds gain as Bank of England scraps long-dated gilt sales

Key facts

• The Bank of England will not sell long-dated gilts as part of its quantitative tightening program.
• UK government bonds rallied after the announcement.
• Borrowing costs fell following the change in the Bank of England's bond sale plans.

UK government bonds flipped to gains after the Bank of England announced it would not proceed with planned sales of long-dated gilts as part of its quantitative tightening program. The decision, which surprised markets, led to a drop in borrowing costs across the UK debt market. The central bank had previously signaled its intention to sell off longer-dated bonds to reduce its balance sheet, a process known as quantitative tightening (QT). The reversal of this plan suggests a shift in the Bank of England's approach to managing its balance sheet and its impact on market liquidity.