Gilt yields rise as Trump delays tariff on $200bn China trade

15-year gilt yields chart - Based on figures for February 2019

February 2019 Review

Gilt yields rise 18 basis points as Trump delays increasing tariffs from 10% to 25% on $200 billion on Chinese goods. Annuity rates have decreased with 71% lower before gilt yields increased at the end of the month.

Gilt yields experienced a rapid rise at the end of the month following a delay by US president Donald Trump in raising tariffs on $200 billion of Chinese goods from 10% to 25%.

The 15-year gilt yield increased by 18 basis points to 1.61% during February 2019 with providers of standard annuities decreasing rates slightly by an average -1.15% for this month and we would expect rates to increase by 2.85% in the short term if yields do not fall.

For smoker and enhanced annuity providers have decreased their rates by an average of -1.04% and rates may rise by 2.74% in the short term if yields do not fall.

Fig 1 below shows the annuity rates changes for the whole market and the proportion that have either increased, decreased or or did not change. It also shows the range of the changes of the annuity rates over the last month:

Annuity Rates Changes Increase No change Decrease   16%   13%   71% Increases of: up to 1.7%   Decreases of: up to -4.4%

Fig 1: Annuity rate changes for the whole market

Fig 2: Change in standard rates last month compared to gilt yields

Fig 3: Change in enhanced rates last month compared to gilt yields