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4 March 2019 last updated

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

Gilt yields rise as Trump delays tariffs
 
Standard rates:  
annuity rates change 1.15%
Enhanced rates:  
annuity rates change 1.04%
Gilt yields:  
annuity rates change 18 basis point
 
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15-year gilt yields chart - Based on figures for February 2019
Latest gilt yield chart

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
annuity rates decrease   16%
annuity rates no change   13%
annuity rates decrease   71%
Increases of:
up to 1.7%

 

Decreases of:
up to -4.4%

  Fig 1: Annuity rate changes for the whole market


For the month 16% of annuity rates increased by up to 1.7% with 13% remaining unchanged and 71% decreasing by up to -4.4%.

What happened to standard rates

Below shows a fund of £100,000 with the change in standard annuity rates for single and joint pensioners from age 55 to 75 with different annuity options such as level or escalating over 1 month compared to gilt yields:

Standard annuity 1 month changes
Fig 2: Change in standard rates last month compared to gilt yields


What happened to enhanced rates

Lifestyle smoker and enhanced annuities have decreased significantly across the board for all types of annuities and ages.

Enhanced annuity 1 month changes
Fig 3: Change in enhanced rates last month compared to gilt yields


For the latest updates see Annuity Rates Review.

Changes to the 15-year gilt yields

The yields change for the month from 1.43% to 1.61% or 18 basis point. Fig 2 below shows the daily 15-year gilt yields and the increase or decrease from the previous day's close:


15-Year Gilt Yields - February 2019
Day Rate (%) Change (bp*)
1 1.44 +1
4 1.48 +4
5 1.43 -5
6 1.42 -1
7 1.38 -4
8 1.36 -2
11 1.38 +2
12 1.39 +1
13 1.39 0
14 1.36 -3
15 1.38 +2
18 1.38 0
19 1.40 +2
20 1.40 0
21 1.41 +1
22 1.48 +7
25 1.50 +2
26 1.53 +3
27 1.59 +6
28 1.61 +2
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points

News related stories:
Annuity rates resist fall in yields with fear of US slowdown
Retirement income down 14% with falls in equity and gilt yields
Annuity income hit by volatility in global equity and gilts market
Pension annuities fall as US tariffs creates economic uncertainty
Annuity Rates
  Age Single Joint  
  55 £4,574 £4,142  
  60 £4,961 £4,610  
  65 £5,691 £5,238  
  70 £6,478 £6,098  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
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