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Tsys Finish Near Highs, BoE Surprise Bond Buy Program

US TSYS
Tsys finish broadly higher/near highs, curves reversed early steepening to bull flattening after the BoE annc'd a surprise temporary bond buying commitment (GBP5B, over 20Y maturity) ahead the NY open.
  • The vast majority of the GBP1.025bln in offers accepted by the BoE were made up of two Gilts: 1.25% Jul-51 (GBP670.1mln) and 3.75% Jul-52 (GBP157.7mln). Going forward the BoE will hold daily operations from 14:15-14:45 UK time until 14 Oct. Size is set at the same GBP5bln for future auctions although the BOE "retains the discretion to alter any of the terms at any time"
  • Still off pre-BOE tax cut annc levels w/ 30YY currently at 3.6763 (-.1491) Yield curves initially bull steepened to new highs (2s10s -23.62) before reversing and snapping flatter (2s10s -4.681 to -39.084 after the bell).
  • Any reaction to Inventories data (and multiple Fed speakers on the session, for that matter) were lost in the shuffle: August reading of the Advance Goods Trade Balance -$87.3B vs. -89.0B est, preliminary August reading of Wholesale Inventories is +1.3% MoM vs. +0.4$ est.
  • Tsys holding near highs after $36B 7Y note auction (91282CFL0) stops through: 3.898% high yield vs. 3.905% WI; 2.57x bid-to-cover vs. 2.65x last month.
  • The 2-Yr yield is down 19.9bps at 4.0836%, 5-Yr is down 26.4bps at 3.9202%, 10-Yr is down 24bps at 3.7052%, and 30-Yr is down 14.7bps at 3.6781%.
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