September’s ‘mini-budget’ saw the Bank of England step in to avoid a potentially disastrous run on the gilts market, with a £19bn purchase programme of long-dated gilts, adding much-needed liquidity.

Following this, some observers have begun to suggest that LDI-driven demand for long-dated gilts looks set to decline. This is down to two forces, says Patrick Jenkins of the FT: More defined-benefit schemes are beginning to unwind, therefore the leverage implemented by these schemes is reducing alongside their demand for gilts. Secondly, from a liability matching perspective, most DB schemes are in run-off, therefore liabilities are in decline, and so is the need for long-dated gilts to match.

Jenkins’s final point refers to the recent rise in gilt yields and the direct positive correlation between higher rates and a scheme’s ratio of assets to liabilities. The increase in rates has led PwC to estimate that the country’s 5000 corporate-backed schemes now have an aggregate surplus of roughly £300bn, which will likely attract more insurance buyouts - in turn reducing demand for long-dated gilts. Others argue that schemes met September’s margin calls by selling off equities and riskier credit - causing the demand for long-dated gilts to increase as schemes now take advantage of higher long-term yields.

Either way, there is no denying the fact that the gilt market has seen a major shake-up in recent months. With a greater surplus, more insurance buyouts can be expected, leaving them with the decisions to make on purchasing higher yielding gilts.