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GILTS: VIEW: Late Friday saw Goldman Sachs note that "the UK Gilt curve
steepened this week after the BoE increased the stock of QE by GBP100bn but
reduced the pace of purchases by a substantial amount (from GBP13.5bn per week
to around GBP4bn per week). In March, the MPC emphasized market functioning and
term premium compression as the key objectives of monetary policy. This week,
the MPC argued that better economic news and calmer financial markets justified
a slower pace of purchases. Overall, we think that it is expectation of the
stock of QE that matters more than the pace -implicitly, however, a sharp
reduction in the pace will lead to a reduction in expectations of the total
stock. On balance, we expect curve steepening to continue tactically, but that
ultimately the BoE will return to QE, and we expect an additional GBP100bn of
gilt purchases in November. Also supporting a steeper curve is the ongoing
discussion of negative rates; while it was absent from the BoE meeting minutes,
Governor Bailey reiterated in the press briefing that negative rates were under