USD Offered & Core FI Bid On FT Report That BoE May Extend Gilt Purchases

Core FI markets go bid and the USD goes offered (driven by a bid in GBP) on the back of the previously outlined FT article which noted that “the Bank of England has signalled privately to bankers that it could extend its emergency bond-buying programme past this Friday’s deadline, according to people briefed on the discussions, even as Governor Andrew Bailey warned pension funds that they “have three days left” before the support ends.”

• The article went on to note that “several bankers who have been briefed by the BoE said officials are watching whether so-called liability-driven investment managers, which help pension funds manage risks in their portfolios, have been able to build up enough cash reserves to enable their clients to meet margin calls.”
• “Representatives from the central bank then informed some lenders that it was prepared to extend the facility past the October 14 end date if market conditions demanded it, according to three people briefed on the discussions.”
• Ultimately, this seems like another can kick down the road if there is any truth to the report, with the initial moves seen on the back of the story moving away from their from extremes.