Schroders and BlackRock snapped up gilts during slump
By Abigail Townsend
Date: Thursday 03 Jul 2025
(Sharecast News) - BlackRock and Schroders snapped up gilts this week, it was reported on Thursday, after they gambled on Rachel Reeves staying at Number 11.
Both gilts and the pound sold off sharply on Wednesday, in response to an unsettling performance in the House of Commons, when Keir Starmer declined to give his full backing to the visibly upset chancellor sitting behind him.
As rumours mounted Reeves was about to lose her job, markets panicked that she would be replaced by a less City-friendly politician, who would loosen fiscal rules and boost borrowing.
There was a huge sell-off in gilts in 2022, after Liz Truss's mini budget panicked markets.
However, both BlackRock and Schroders confirmed to the Financial Times that they had snapped up gilts during the sell-off.
Julien Houdain, head of global unconstrained fixed income at Schroders, told the newspaper: "We actually bought a few more gilts, thinking that there won't be any follow-through [from Starmer to fire Reeves] because it's so obvious that the market is going to back Reeves."
Simon Blundell, co-head of the European active fixed-income team at BlackRock, said on Thursday: "We are overweight the gilt market, we did add to that yesterday afternoon."
Blundell told the FT that BlackRock had taken advantage of the sharp fall in bond prices to bet gilts would outperform US Treasuries, as it did not believe the market sell-off would be as bad as that in 2022.
Ten-year yields hit a high of 4.68% on Wednesday but recovered to 4.55% on Thursday after Starmer said Reeves would be chancellor for "a very long time to come, into the next election and beyond it".
He also said he had not been aware of how upset Reeves was, as he was so focused on responding during Prime Minister's Questions.
The pound, which had fallen against the dollar on Wednesday, also strengthened.
The government has said Reeves was dealing with a personal matter.
Kathleen Brooks, research director at XTB, said: "Reeves has the backing of the bond market. Far from weakening her position, the surge in bond yields is a warning to the prime minister and the Labour party as a whole: the market does not want to see a more left-leaning chancellor in place, and Reeves is about as market-friendly a chancellor as the party can hope for.
"The bond market reminded the hard left of Labour that the UK economy cannot afford its benefits bill. Part of the move in higher yields was also generated by concerns about what is in store for the Budget in the autumn."
Yields move inversely to bond prices.
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