Quantitative Easing - March 2009
30 March 2009
The first auction of the week fell into the pattern of previous auctions with nearly all of the action reserved for the banks in the pm session. Bids at £5.085Bn against the available £2.5Bn meant that the week is off to a satisfactory start at 2.03 x Cover.
25 March 2009
The available £3.5Bn was covered 1.4 X with £5.91Bn of bids. Interestingly for different reasons the £1.75Bn of new gilts issued today only attracted bids of £1.63Bn; the last time that occurred was 1995 for ordinary gilts and 2002 for index linked gilts. City analysts put the result down to market nerves following Mervyn King's speach last night warning the Government about excessive spending backed up by increased borrowing rather than any concern that the covenant of UK plc was looking a bit sick !!!!
23 March 2009
The BoE released the results for today's allocation of £2.5Bn.
The cover ratio was 3.21 with bids at £7.99Bn . Next up is Wednesday at £3.5Bn of available funds.
20 March 2009
The BoE has announced that next week’s auctions will have an additional 0.5Bn available each day
· Monday - £2.5Bn
· Wednesday - £3.5Bn
This is in response to the high level of demand which saw Wednesday at 7.35 x Cover
The market will be watching closely to see if 3 month LIBOR rate continues to ease at a steady rate
18 March 2009
The second auction of the week saw £12.98Bn of bids against the available £3Bn - a strong demand multiple of 7.35
Given the strength of the demand against the first two auctions, there might be a case for increasing the amount available for next week ....it will be interesting to see when these cash injections start to move LIBOR rate.
16 March 2009
The second APF Auction took place today with £2Bn available.
There was very little appetite by non bank institutions so the second round this afternoon brought in offers of £6.8Bn – effectively a 3.4 times multiple. The available funds for Wednesday’s auction has been set at £3Bn. It will be interesting to see how the multiples hold up in the next fortnight having started last week at 5 times.
The SWAP rates should start to reflect the auction results in the coming days but you can find more on this on our commercial borrowers blog.
11 March 2009
The BoE will today offer to buy up to £2bn of government bonds from investment institutions and individuals, in the first of a series of auctions.
The first "auction" will take place at midday when the Bank will invite offers from investment institutions and individuals to sell government bonds, known as gilts. You can find out more on our commercial borrowers blog article - First Quantitative Easing Auction oversubscribed by Banks this afternoon
Two hours later there will be a second stage of this so-called reverse auction, allowing banks to participate. The results, including the average price and the total amounts bought, will be published immediately after the auction.
Similar auctions will then follow twice weekly.
It is expected that this will drive gilts downwards and if similar volumes are offered up in the coming days, thius should lead to some improvement in money supply – watch 3 month LIBOR rate over the next week....
09 March 2009
Lloyds Banking Group announces £12Bn of new lending of which £3Bn is for mortgages and £9Bn is for business lending in return for £260bn of assets – this should not be viewed as quantitative easing as it is part of the deal under which the Gov’t buys their assets to free up further liquidity (APS) and has resulted in the Gov’t (actually you and us) now owning 65% of the shares. We comment on this under our commercial borrowers blog...
05 March 2009
BoE announces £75Bn of quantitative easing as an initial measure with up to £150Bn available.......see above
