Bank Of England To Stop Selling 20- And 30-Year Gilts As Yields Soar
The Bank of England is expected to stop selling 20- and 30-year gilts as long-dated yields climb, the Telegraph reported. The move would alter the pace of quantitative tightening and could ease pressure on UK bond markets when the BoE announces its plan on Thursday.
The Bank of England is set to announce this week that it will stop selling 20- and 30-year government bonds, according to the Telegraph report carried by ZeroHedge. The gilts have been hit by a global selloff in debt markets, and the BoE is due to set out its quantitative-tightening pace alongside its latest interest-rate decision on Thursday.
The central bank had already reduced sales of longer-dated gilts. The reported change would therefore be a further adjustment to the way it runs down its bond holdings, rather than a new start to quantitative tightening. The report said the decision could potentially free up cash for finance minister John Healey, although it did not quantify the effect.
The immediate market mechanism runs through the long end of the UK government-bond curve: stopping sales would remove one source of supply from the 20- and 30-year maturity sectors. The policy also matters for the UK Treasury because the reported change could affect the financing backdrop for government debt, while the rate decision and QT guidance will shape the broader gilt-market response.
The report attributes the expected announcement to the Telegraph and does not establish that the BoE has formally made the decision. It also does not say how long the pause would last, how the central bank would adjust sales elsewhere, or how much cash might become available to the finance ministry.
The next test is Thursday's rate decision and quantitative-tightening announcement. The BoE's treatment of 20- and 30-year gilts, the overall pace of sales, and the market reaction in long-dated yields will determine whether the reported pause is viewed as a targeted operational change or a broader response to stress in UK debt markets.
The reported BoE shift is supportive for long-dated UK gilts but leaves the broader QT and inflation signal unresolved.
The immediate implication is a potentially friendlier supply backdrop for 20- and 30-year gilts, but the market still has to absorb the BoE's full quantitative-tightening plan and rate decision. The read therefore stays balanced: a targeted halt could relieve pressure at the long end, while any offsetting sales or hawkish policy guidance could limit the benefit.
The BoE could announce a different QT mix, keep overall balance-sheet runoff broadly unchanged, or pair the change with guidance that pushes gilt yields higher.
CoverageSource: ZeroHedge · Published here WED, SEP 16 · 2:45 AM ET · the only report in this recordHow this is decided →
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The Telegraph's reported halt would remove planned sales from the 20- and 30-year sectors after those bonds were hit by a global debt-market selloff.
The reported decision is not yet confirmed, and the article gives no detail on the overall QT pace or whether sales would shift to other maturities.
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