The BOE has dominated moves in the.....>

GILT SUMMARY: The BOE has dominated moves in the gilt market today.

- This morning saw gilts drift a bit higher as the market seemed to be concerned

that there would be a briefing for the press after today's MPC meeting

(something that happened after the last meeting too and has been a regular

post-lockdown feature). This led to some market participants believing that the

MPC would surprise with a more dovish than expected programme.

- In actuality, the BOE surprised to the hawkish side. GBP100bln of QE was

announced as expected, but 18/23 analyst notes that we had read expected the

current purchase pace to be maintained until at least the end of July. The BOE

announced that these purchases would be carried out by the "turn of the year"

and until the August MPC meeting purchases are set to drop from GBP13.5bln per

week to GBP6.9bln per week. 10-year gilt yields spiked more than 6.5bp higher

(although slowly as the market initially didn't realise purchases were slower).

On the day 10year yields are now 3.5bp higher than yesterday. There has been a

substantial bear steepening of the 10s30s curve. The BOE has now confirmed that

March was a one-off and it is now focused on flow rather than stock once again.