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First temporary gilt sales op results in around an hour

  • Today we will see the first operation to sell some of the BOE’s temporary holdings of gilts (the long-dated/linkers bought during the market turmoil in October).
  • The operation will be “demand-led” with no set size. The Bank has set out some guiding principles:
    • First, bids below prevailing market mid-prices at the end of the window will not be accepted.
    • Second, the Bank “will not allocate bids for gilts in a window where the submitted price is significantly lower than the previous trading day’s close.”
  • With these conditions in place, it is unclear at present whether there will be much demand. It is also not really clear what a "significantly lower" price than the previous day is.
  • Results will be available shortly after the operation window closes at 15:30GMT, but it is unclear whether results will take 2 minutes or 30 minutes (it kind of depends on the takeup and also as its a new type of operation).
  • The operations will also take place on Wednesday and Friday (and then generally on Tuesdays, Wednesdays and Fridays going forward with the exception of the 19 December to 6 January period).

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