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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
BOE
- There will be increased focus again on the STR operation results given the volatility seen over the past couple of weeks (following the relatively gradual increase that we have been seeing since around mid-March.
- STR usage increased last week by a record GBP6.828bln to GBP34.292bln (also a record), having fallen GBP6.551bln the previous week (the first time a fall of more than GBP1.4bln had been seen).
- The BOE continues to estimate equilibrium reserve levels (PRMM) at GBP325-480bln and reserves are around GBP752bln - so still far in excess of this.
- Note that the RONIA-SONIA spread has been picking up (very marginally) recently and is back above 10bp, but is still notably below some of the spikes seen (which have reached yo to the 14-16bp range) earlier this year.
- The longer we see STR usage continue to gradually increase and the higher the RONIA-SONIA spread moves, the more questions there will be over whether the equilibrium reserve levels are much closer than the BOE (and most others) currently expect.
- We don't expect this to impact the decision (to be made alongside the September MPC meeting) surrounding the pace of APF sales next year - with the BOE comfortable with STR usage increasing while APF assets reduce.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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