Hargreaves Lansdown has reported a significant surge in gilt trading activity among its clients during January 2025, with both trading volumes and values reaching their highest levels since 2021.
The firm saw a 75% increase in gilt trading compared to January 2024, while trading activity nearly doubled compared to December 2024.
According to Hal Cook, Senior Investment Analyst at Hargreaves Lansdown, the spike in gilt yields during January 2025 presented an attractive opportunity for HL’s clients to lock in yields amid wider economic uncertainties.
Retail investors piling into gilts isn’t necessarily a signal interest rates have peaked, but it does provide interesting insight into investor positioning in the current macroeconomic backdrop.
“Gilt yields spiked higher in January, continuing a trend from September last year. The peak in yields on 13 January saw the 2 and 10-year yields hit around 4.6% and 4.9% respectively,” explained Hal Cook, senior investment analyst, Hargreaves Lansdown.
“Yields globally had increased due to a number of factors, not least the unknown impact of Trump’s policies, but also linked to the affordability of government debt. The two yields have since come back down to around 4.18% and 4.48% respectively. So, anyone who managed to time their purchases around the peak in yields (and trough in prices – prices and yields move in opposite directions) are already sat on a nice little profit. “
“Another potential factor was a specific gilt that matured on 31 January. This had been popular amongst retail clients as it had a low coupon (interest rate), which meant the majority of recent returns from it had come in the form of a capital gain (rise in price). Gilts owned directly are not subject to capital gains tax, and so this specific gilt had effectively offered most of its return tax free. With investors aware that the gilt was going to mature very soon, it’s likely many sold ahead of the maturity and reinvested in other gilts, given the spike in yields.”