The rise in yields was amplified by the demand for collateral on leveraged positions and derivatives of a number of defined-benefit pension funds (which use these investment strategies to balance expected pension payments with the performance of returns on their assets).
In order to cope with such demand, pension funds would have had to sell large amounts of government securities under challenging market conditions, which could have triggered a destructive spiral. Only the emergency intervention of the Bank of England – which temporarily suspended its planned quantitative tightening and introduced extraordinary measures – was able to restore orderly conditions. 14.