The BOE is set to use its asset purchase facility to sell as well as buy corporate bonds, beginning on January 8. The move is to improve liquidity in the bond market and does not reflect a shift in policy, the BOE says.
Having bought about half the gilt market in 2009, the BOE clearly is impacting the ability of the markets to functions in the liquid manner thy did previously.
Markets are quite choppy but the dollar is lower on balance after a disappointing GDP report. Firmer US bond yields are prompting concerns that rising US mortgage rates could snuff any housing market rebound. Cable is at 1.6015 after falling as low as 1.5979 ahead of the data.
