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Will the gilt market cope with active gilt sales? (2/2)

GILTS
  • As we discuss above, the DMO has already held a tender in August and is proposing four additional auctions in the October to December quarter. This is depleting the “unallocated” issuance pot to around GBP600mln – a very low level for this stage of the fiscal year. We think that this is likely because the remit target will be increased alongside a new budget – and the DMO is front-loading issuance a little more than it would usually in anticipation of this. So there is potential for issuance, particularly in November onwards, to increase even further – which could start to increase liquidity pressures and the functioning of the gilt market in our view.

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