October 03, 2022 16:03 GMT
The BoE has issued a market notice confirming it will continue to conduct long-dated Gilt purchase operations through the previously specified date of Oct 14.
- Though following today's very low takeup (GBP22mln of GBP5bln available), the Bank reminds that the operations are designed to "act as a backstop".
- As we noted earlier asking why there was such a low takeup, there is no detail on the offer prices that were rejected, just those submitted. The Bank reminds that it "reserves the right to set a maximum price / minimum yield that will be applied to auctions. These reserve prices / yields are reviewed ahead of each auction to ensure consistency with the backstop nature of the scheme."
- Additionally, "the Bank is studying patterns of demand and will continue to use reserve pricing in order to ensure the backstop objective of the tool is delivered. In addition, the Bank stands ready to adjust any of the other parameters of the auction in order to secure that objective. Finally, from Tuesday 4 October, the Bank is asking GEMMs to identify offers made on behalf of themselves or clients."
- Slightly bearish reaction in Gilt prices to the announcement, though yields remain much higher than they began today's operation (30Y last 3.89%, up 7bp on the session, though up nearly 35bp from pre-op).