It is now going to buy up huge swathes of Government debt to shore up prices, to prevent a material risk to UK financial stability. They didn't even do that in the GFC
Hang on purchases will be "fully indemnified by the Treasury". Can anyone explain how the government buying its own bonds (which they will presumably have to borrow to fund) helps.
What Heff said at 11.42. Its for two weeks only apparently. Anyone know what if any impact this has on interest rates. ( Not addressed to Risky/Hanners)
This is nothing to do with FX reserves. These are sterling denominated gilts they are buying and so it is more QE. I think they are just reminding the hedge funds shorting the sh1t out of UK gilts that they can still hurt them. There will be some squealing in Mayfair today I suspect as some get caught with their pants down.
It's not so much pyramid scheme-y as Mugabe-y but they had to do something and the government has backed them into a really sh1tty corner with their political stunts.
How can you really hurt them when your "weapon" is debasing the value of the asset you are trying to prop up? I'll buy these gilts off you with printed money that's going to be worth X% less next week due to the printing. If people are immediately converting the proceeds of this intervention into another currency they are devaluing the £. This is exactly what I would be doing - oh look, there's a mug in the market. offload everything on them and get the money into hard currency ASAP. Draghi had the benefit of Germany's credit rating and the entire eurozone's cash to pull this off, and the Fed has a currency people will buy for the foreseeable.
They needed to do a 2-3% immediate rate rise with a whatever it takes message. Now speculators think either the govt has leant on them not to, or they haven't got the guts to do it.
This is adding further to the basket case narrative.
@banana a 2/3% immediate rise in IR would cause the housing market and the attendant verticals to freeze overnight, it would be a blood bath. The public understand IR, house prices, and mortgage payments.
They don't understand this stuff nor do they care, thats why IR rates wont rise in the way you suggest, the public will be outraged, and LTPM won't allow that. Political suicide.
Kwarsi and his latest statement , post meeting CEOs of Investment Banks, Blackrock, Blackstone et al. " The government is committed to fiscal discipline, bla bla" err what. He's going to double down now isn't he?
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how does this even work - are we just borrowing from ourselves?
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Err of course they did.
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Hang on purchases will be "fully indemnified by the Treasury". Can anyone explain how the government buying its own bonds (which they will presumably have to borrow to fund) helps.
Totally confused.
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Yields have already plummeted. Job done.
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this intervention is using our reserves, indemnified by the government
bond buying during the credit crunch used QE: i.e new invented money
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"job done"
heh
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heh heh
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Has the magic money tree suddenly come into bloom again?
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Does this mean the BoE won't be increasing interest rates?
I think this is partly the fault of the BoE, they have been too relaxed increasing interest rates.
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What Heff said at 11.42. Its for two weeks only apparently. Anyone know what if any impact this has on interest rates. ( Not addressed to Risky/Hanners)
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Ok I’ll let someone else have a turn confirming my analysis
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Oh good, spending our reserves to pay for the casino sharks ransacking of the economy. How fair.
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Heh @ ‘reserves’
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Kwarsi saying this is a global issue. Well no other country is doing it, none.
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On the upside, nice to see the Bank schooling the children in government.
Are the meatshields out yet?
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I thought our fx reserves were only about 90bn?
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This is nothing to do with FX reserves. These are sterling denominated gilts they are buying and so it is more QE. I think they are just reminding the hedge funds shorting the sh1t out of UK gilts that they can still hurt them. There will be some squealing in Mayfair today I suspect as some get caught with their pants down.
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Feels a bit pyramid scheme-y to me.
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Can I interest you in any half price chocolate?
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Only a bit royalty?
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Was the pound meant to fall against the dollar past this announcement .....
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It's not so much pyramid scheme-y as Mugabe-y but they had to do something and the government has backed them into a really sh1tty corner with their political stunts.
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This is the reason why
https://bondvigilantes.com/blog/2022/09/collateral-calls/
Essentially the exchange rate and long-dated yields moved too quickly for pension funds to risk-manage effectively.
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yep pension funds were being forced to sell at a loss to maintain cash collateral requirements
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FT article too
https://www.ft.com/content/038b30c3-f550-4cc0-93ed-9154021d6ee2
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How can you really hurt them when your "weapon" is debasing the value of the asset you are trying to prop up? I'll buy these gilts off you with printed money that's going to be worth X% less next week due to the printing. If people are immediately converting the proceeds of this intervention into another currency they are devaluing the £. This is exactly what I would be doing - oh look, there's a mug in the market. offload everything on them and get the money into hard currency ASAP. Draghi had the benefit of Germany's credit rating and the entire eurozone's cash to pull this off, and the Fed has a currency people will buy for the foreseeable.
They needed to do a 2-3% immediate rate rise with a whatever it takes message. Now speculators think either the govt has leant on them not to, or they haven't got the guts to do it.
This is adding further to the basket case narrative.
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@banana a 2/3% immediate rise in IR would cause the housing market and the attendant verticals to freeze overnight, it would be a blood bath. The public understand IR, house prices, and mortgage payments.
They don't understand this stuff nor do they care, thats why IR rates wont rise in the way you suggest, the public will be outraged, and LTPM won't allow that. Political suicide.
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Kwarsi and his latest statement , post meeting CEOs of Investment Banks, Blackrock, Blackstone et al. " The government is committed to fiscal discipline, bla bla" err what. He's going to double down now isn't he?
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Pound now making a strong recovery from this morning’s lows
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Risky/Hanners the pound has not made a strong recovery has it though?
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It’s almost back to where it started the day per the bbc. As I say, strong recovery v this mornings lows. Don’t get much stronger than 💯
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Nationalise the BoE and do it as soon as you can
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🤡
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What Chimp said.
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