{"id":63760,"date":"2022-10-10T10:00:00","date_gmt":"2022-10-10T15:00:00","guid":{"rendered":"https:\/\/olduvai.ca\/?p=63760"},"modified":"2022-10-10T10:00:00","modified_gmt":"2022-10-10T15:00:00","slug":"boes-new-support-plan-fails-as-uk-gilt-yields-explode-higher","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=63760","title":{"rendered":"BoE’s New Support Plan Fails As UK Gilt Yields Explode Higher"},"content":{"rendered":"
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BoE’s New Support Plan Fails As UK Gilt Yields Explode Higher<\/a><\/h3>\n<\/header>\n
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Update (1030ET):<\/strong><\/u><\/em>\u00a0Despite The BoE promises to do almost ‘whatever it takes’, long-dated gilt prices are collapsing today. 30Y gilt yields are up a stunning 34bps now, soaring towards crisis highs…<\/p>\n

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What next for BoE?<\/p>\n

The pain in the UK is spreading to US yields<\/strong>\u00a0(remember US bond market holiday today but futures trading)…<\/p>\n

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10Y UST yields are implied around 6bps higher for now.<\/p>\n

*\u00a0 *\u00a0 *<\/p>\n

Over the weekend<\/a>, Band of England (BoE) Deputy Governor Dave Ramsden\u00a0indicated that the bank intends to\u00a0charge forward on interest rate hikes<\/a>, suggesting that this is the only way to tame the ongoing inflation crisis.<\/p>\n

“However difficult the consequences might be for the economy, the MPC must stay the course and set monetary policy to return inflation to achieve the 2% target sustainably in the medium term, consistent with the remit given to us.”<\/strong><\/em><\/p><\/blockquote>\n

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Just two days after that statement,\u00a0BoE on Monday announced further measures to ensure financial stability in the U.K.<\/strong>, building on its intervention in the long-dated bond market.<\/p>\n

Specifically, The BOE said it will:<\/p>\n

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  1. Double the size of its auctions to purchase long-dated UK government bonds<\/strong>\u00a0to \u00a310 billion a day until\u00a0Oct. 14<\/strong><\/u>, when the BOE plans to close that program as previously announced<\/li>\n
  2. Launch a Temporary Expanded Collateral Repo Facility,<\/strong>\u00a0or TECRF, that will run beyond the end of this week until\u00a0Nov. 10<\/strong><\/u>. Its purpose is to enable banks to ease pressures in LDI funds through liquidity insurance operations.<\/li>\n
  3. Temporary expansion of collateral it accepts<\/strong>\u00a0under its existing Sterling Monetary Framework to include corporate bonds.<\/li>\n<\/ol>\n

    Additionally, regular repo-related operations also remain available to help.<\/p>\n

    So far, investors haven\u2019t taken up as much of the support as the BOE has offered<\/strong>. In the eight auctions to date, the BOE bought just \u00a34.6 billion of bonds, about 12% of the \u00a340 billion capacity of the program.<\/p>\n

    \u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    BoE’s New Support Plan Fails As UK Gilt Yields Explode Higher Update (1030ET):\u00a0Despite The BoE promises to do almost ‘whatever it takes’, long-dated gilt prices are collapsing today. 30Y gilt yields are up a stunning 34bps now, soaring towards crisis highs… What next for BoE? The pain in the UK is spreading to US yields\u00a0(remember […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[56,5185,431,534,4318],"class_list":["post-63760","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-england","tag-bond-market","tag-interest-rates","tag-monetary-policy","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/63760","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=63760"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/63760\/revisions"}],"predecessor-version":[{"id":63761,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/63760\/revisions\/63761"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=63760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=63760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=63760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}