Yields on UK Gilts Reach 5.6%, Echoing the Turmoil of the 2022 Pension Scare

UK Bond Yields Spike to 5.6% as Trade Turmoil Sparks Flashbacks to 2022 Pension Crisis

A fresh wave of market anxiety is rippling across the globe as UK borrowing costs jump to levels not seen in over two decades, reigniting fears of financial instability reminiscent of the pension fund panic in 2022.

On Wednesday morning, the yield on the UK’s 30-year gilt surged to 5.6%, the highest since 1998, as investors dumped long-dated government bonds in response to soaring global uncertainty. The move mirrors a similar sell-off in U.S. Treasuries and follows days of mounting concern over the economic impact of escalating trade tensions.

Since the latest sell-off began last Thursday, the Nasdaq has dropped 10%, while bitcoin (BTC) — often seen as a barometer for market stress — has declined 8%. Meanwhile, UK 30-year bond yields have jumped 8%, with their U.S. counterparts rising an even sharper 12%.

Charlie Morris, founder of ByteTree, says the market is sending a clear message.

“The UK has been overspending for years. It hasn’t run a balanced budget since 2001, and now the gilt market is reacting,” said Morris. “Investors looking for refuge won’t just buy gold — they’ll move into bitcoin too.”

The backdrop: President Donald Trump’s aggressive new tariff policy has reignited fears of a full-scale trade war. With supply chains at risk and inflation fears rising, investors are bracing for prolonged turbulence.

Former MP Steve Baker warned that the economic damage could quickly spiral.

“President Trump isn’t negotiating — he’s applying raw economic pressure,” Baker told CoinDesk. “Without a recommitment to free trade, this chaos could leave lasting scars.”

The bond market’s sharp reaction has stirred uncomfortable echoes of the UK’s 2022 crisis. Back then, a surprise mini-budget sent gilt yields spiraling higher, crashing the pound and nearly triggering a collapse in the pension system. Defined benefit schemes using complex leveraged strategies were forced to liquidate holdings rapidly, creating a feedback loop of selling that only ended when the Bank of England stepped in with emergency purchases.

The gilt market, just $1.5 trillion in size at the time, proved too shallow to absorb the shock — especially compared to the $9.9 trillion U.S. Treasury market. A post-mortem from the Chicago Fed cited structural issues like excess leverage and poor liquidity as central to the breakdown.

With yields once again surging and political uncertainty rising, markets are on edge — and many fear the conditions for another crisis are beginning to fall into place.