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.
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 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 Bank of England is expected to stop selling 20- and 30-year gilts as long-dated yields climb.
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 · 2 reports · 2 publishers in this record · latest listed: Investing.com · THU, SEP 17 · 11:21 AM ETHow this is decided →
Earlier context and later coverage are dated relative to this report. Automatically linked reports may cover a broader event.
No later reports linked yet.
Follow this story to find new evidence in your Following desk.
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.
Kept as written · your side, if you take one, is graded privately against licensed closes after 10 trading days · nothing here is advice · How the Wire is made →