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Post by thelivyjr »


"Oil Rallies Amid Dwindling Stockpiles and Growing Energy Conflict"

by Bloomberg | Ilena Peng and Julia Fanzeres

Wednesday, September 28, 2022

Oil jumped the most since July as an escalating energy conflict with Russia and declining US inventories raised the prospect of supplies tightening in the near term.

West Texas Intermediate settled above $82 a barrel after rising 4.7%, the most in a single day since mid-July.

US crude stockpiles fell last week for the first time in a month as some regional fuel stockpiles declined precariously.

The European Union announced a new round of sanctions against Russia while three ruptured pipelines in the Baltic Sea are widely suspected to be the result of sabotage.

A weaker US dollar also bolstered Wednesday’s rally.

“The damage to Nord Stream is very concerning both from a supply issue and a political issue in that it assures supply from Russia is not reliable,” said Dennis Kissler, senior vice president at Bok Financial Securities.

“It raises concerns that all energy prices are vulnerable to price spikes if we see an early start to a harsh winter.”

Oil futures have been volatile for months amid lackluster liquidity.

Prices stand almost 40% lower than their peak earlier this year amid a rising sense of certainty that central bank efforts around the world to contain inflation will lead to an economic slowdown.

However, geopolitical uncertainty still threatens supplies as traders watch for any hint of a slowdown.

US data showed some signs of demand improving in weekly figures.

Crude inventories fell 215,000 barrels last week, the US Energy Information Administration reported.

West Coast gasoline stockpiles fell to their lowest in 10 years and New England’s distillate stocks, which include diesel and heating oil, fell to an all-time low for this time of year.

Russia, which has to discount its barrels because of Western sanctions, is pushing OPEC and its allies to cut their collective output by 1 million barrels a day when the producer nations meet next week, Reuters reported Tuesday.

A production cut would further tighten supplies and could rally prices.

OPEC and its partners may be amenable to slashing output as some member countries see their revenues shrink from cheaper oil.


West Texas Intermediate futures for November delivery climbed $3.65 to settle at $82.15 a barrel.

Brent futures for November settlement added $3.05 to settle at $89.32 a barrel.

Elsewhere, some of China’s top refiners are expecting a better economy in the winter, a bullish signal for oil.

Demand in the country, which is the world’s biggest crude importer, has remained weak for years because of its Covid Zero policy. ... 1-article/
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Post by thelivyjr »


"10-year yield drops the most since 2020 after touching 4%"

Sarah Min @_SARAHMIN Sophie Kiderlin @SKIDERLIN


The benchmark 10-year Treasury yield dropped the most since 2020 on Wednesday, despite briefly topping 4% earlier in the session, after the Bank of England announced a bond-buying plan to stabilize the British pound.

The yield on the 10-year Treasury fell 25 basis points or the most it’s declined since 2020.

It yielded 3.705%.

It hit a high of about 4.019%, or the highest level since October 2008, earlier in the session before erasing those gains.

Yields and prices move in opposite directions.

One basis point is equal to 0.01%.

The benchmark rate came off a near 14-year high after the Bank of England said it would buy longer-dated UK debt to stabilize its plunging currency.

“Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability."

"This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy,” the Bank of England said.

The yield on the 2-year Gilt last traded up 4 basis points to 4.287% after plunging 15 basis points earlier in the day at around 4.6%, while the country’s 10-year yield was flat after dropping nearly 27 basis points to 4.24% at one point during the session.

Hawkish Fed comments

U.S. Treasury yields have been rising recently as traders weight comments from several Fed speakers earlier in the week.

Their broadly hawkish tone suggested to many analysts and investors that further interest rates hikes will be implemented.

This sentiment was echoed overnight by San Francisco Fed President Mary Daly, who said the central bank was “resolute” regarding lowering inflation.

Chicago Federal Reserve President Charles Evans struck a slightly different tone on Tuesday, telling CNBC’s “Squawk Box Europe” that he was concerned about the possibility of rates being hiked too quickly.

Evans also said that he was still “cautiously optimistic” about being able to avoid a recession. ... -high.html
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Post by thelivyjr »


"TREASURIES-Treasury prices rebound sharply after BoE decision"

By Herbert Lash

SEPTEMBER 28, 2022

NEW YORK, Sept 28 (Reuters) - U.S. Treasury prices rebounded sharply on Wednesday after the Bank of England bought long-dated UK bonds to restore financial stability in markets rocked globally by the new British government's fiscal policy plans.

Yields on Treasuries and British gilts plummeted and their prices soared on BoE's intervention to quell a market firestorm sparked by Britain's plans announced last week to slash taxes and ramp up borrowing.

Bond yields move inversely to their price.

The yield on 10-year Treasuries fell more than 26 basis points to just under 3.70%, on track to the biggest single-day drop since March 2009.

In early trade before the BoE's intervention, the benchmark briefly hit a 12-year high of 4.004%.

"The last couple of days Treasuries are a little bit unhinged given how precipitously yields had risen," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale.

"But now that we have a backstop from the BoE, you have a bit of a stabilization and 10s are trading much more in line with fundamentals."

Thirty-year gilt yields ended the day more than 100 basis points lower at 3.934% - the largest one-day fall since at least 1992, when Refinitiv records for the bond began.

Britain's new economic agenda sent the pound to an all-time low against the dollar, just above $1.03, and deepened a steep sell-off that created a bear market in bonds for the first time in decades.

The BoE is trying to cap a vicious sell-off and markets need to not interpret the UK central bank's actions as quantitative easing, Rajappa said.

"That's not the objective."

"The objective is to put a lid, if you will, on long bond yields in the UK," she said.

The BoE's move put a circuit breaker on the upward spiral in yields and stemmed the dollar's advance, the main cause of fear and instability in markets, said Jimmy Chang, chief investment officer at Rockefeller Global Family Office.

The decision also revived "a little bit of the hope that maybe the Fed won't be as aggressive as it has sounded," Chang said.

Recent comments from Fed officials suggested that hopes for an imminent easing of monetary policy is misguided.

Chicago Fed President Charles Evans said in London it would be good to get the policy rate to a range of 4.5%-4.75% by year-end or March, while Atlanta Fed President Raphael Bostic backed another 75-basis-point interest rate hike in November.

The BoE needed to come in and stabilize the market for now, Chang said.

"But then they also say that they're going to be buying gilts into mid-October."

"So what happens after that?"

The implication is the British central bank will need to raise interest rates aggressively,
Chang said.

"They've really been boxed in."

"They're dealing with stagflation and a market just pushing back against what (new Prime Minister Liz) Truss has proposed with very aggressive tax cuts," he said.

The 10-year Treasury last yielded 3.709%, down 25.4 basis points.

The two-year Treasury yield, which typically moves in step with interest rate expectations, fell 21.4 basis points to 4.094%.

The closely watched part of the U.S. Treasury yield curve between two- and 10-year Treasury notes, a gap seen as a harbinger of a looming recession, initially flattened before trading little changed at -38.9 basis points.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.427%.

The 10-year TIPS breakeven rate was last at 2.333%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

In late August the breakeven rate was at 2.64%.

The 10-year TIPS yield earlier hit a 12-1/2-year high at 1.692%.

The U.S. dollar five-years forward inflation-linked swap, seen by some as a better gauge of inflation expectations due to possible distortions caused by the Fed's quantitative easing, was last at 2.356%.

The Treasury sold $36 billion in seven-year notes at a high yield of 3.898% in a well-bid auction.

(Reporting by Herbert Lash, additional reporting by Tom Westbrook in Sydney; Editing by Ana Nicolaci da Costa, Jonathan Oatis and Richard Chang) ... SL1N30Z1YA
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Post by thelivyjr »


"Wall Street ends sharply higher as Treasury yields dip"

By Noel Randewich and Shreyashi Sanyal

September 28, 2022


* Apple drops on concerns about iPhone demand

* Treasury prices rebound after BoE decision

* S&P 500 records largest one-day gain since Aug. 10

* Indexes: Dow +1.88%, S&P 500 +1.97%, Nasdaq +2.05%

Sept 28 (Reuters) - Wall Street ended sharply higher on Wednesday following its recent sell-off, helped by falling Treasury yields, while Apple dropped on concerns about demand for iPhones.

The S&P 500 recorded its first gain in seven sessions after closing on Tuesday at its lowest since late 2020.

Interest rate-sensitive megacaps Microsoft, Amazon and Meta Platforms rallied as the yield on 10-year Treasury notes fell over 0.26 percentage point in its biggest one-day drop since 2009.

Pushing yields lower on Treasuries with maturities six months and longer, the Bank of England said it would buy long-dated British bonds in a move aimed at restoring financial stability in markets rocked globally by the fiscal policy of the new government in London.

"The yield on the two-year Treasury has gone up persistently over the course of the last several weeks, and for the first time we've seen it go down for two days in a row, and that has given equities a breather," said Art Hogan, chief market strategist at B. Riley Wealth.

Investors have been keenly listening to comments from Federal Reserve officials about the path of monetary policy, with Atlanta Fed President Raphael Bostic on Wednesday backing another 75-basis-point interest rate hike in November.

The Fed will likely get borrowing costs to where they need to be by early next year, Federal Reserve Bank of Chicago President Charles Evans said.

U.S. stocks have been battered in 2022 by worries that an aggressive push by the Fed to raise borrowing costs could throw the economy into a downturn.

Apple Inc dropped 1.3% after Bloomberg reported the company is dropping plans to increase production of its new iPhones this year after an anticipated surge in demand failed to materialize.

Apple has been a relative outperformer in 2022's stock market sell-off, down about 15% in the year to date, versus the S&P 500's 22% loss.

All of the 11 S&P 500 sector indexes rose, led by a 4.4% jump in energy and a 3.2% leap in communication services.

The Dow Jones Industrial Average rose 1.88% to end at 29,683.74 points, while the S&P 500 gained 1.97% to 3,719.04.

It was the S&P 500's largest one-day gain since Aug. 10.

The Nasdaq Composite jumped 2.05% to 11,051.64.

Biogen Inc surged 40% after saying its experimental Alzheimer's drug, developed with Japanese partner Eisai Co Ltd, succeeded in slowing cognitive decline.

Eli Lilly & Co , which is also developing an Alzheimer's drug, jumped 7.5%, and it was among the biggest boosts to the S&P 500 index.

Advancing issues outnumbered declining ones on the NYSE by a 5.82-to-1 ratio; on Nasdaq, a 3.66-to-1 ratio favored advancers.

The S&P 500 posted one new 52-week high and 30 new lows; the Nasdaq Composite recorded 26 new highs and 224 new lows.

Volume on U.S. exchanges was 11.7 billion shares, compared with an 11.4 billion average for the full session over the last 20 trading days.

Reporting by Noel Randewich in San Francisco and Shreyashi Sanyal, Susan Mathew and Ankika Biswas in Bengaluru; Editing by Vinay Dwivedi, Arun Koyyur and Jonathan Oatis ... 022-09-28/
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Post by thelivyjr »


"Hurricane Ian crashes ashore in Florida with Category 4 fury"

By Brad Brooks and Brendan O'Brien

VENICE, Fla., Sept 28 (Reuters) - Hurricane Ian plowed into Florida's Gulf Coast with catastrophic force on Wednesday, unleashing howling winds, torrential rains and a treacherous surge of ocean surf that made it one of the most powerful U.S. storms in recent years.

Ian made landfall at 3:05 p.m. EDT (1905 GMT) near Cayo Costa, a barrier island just west of Fort Myers, as a Category 4 hurricane, with sustained winds of up to 150 miles per hour (241 km per hour), the U.S. National Hurricane Center (NHC) reported.

The storm's wind speeds put it just shy of a Category 5 designation on the Saffir-Simpson scale, the most severe classification for storms with maximum sustained winds of at least 157 mph.

About 90 minutes later, the NHC reported Ian had moved ashore the Florida mainland just south of the harborside town of Punta Gorda, with slightly diminished sustained winds topping out at 145 mph.

Governor Ron DeSantis said Ian had generated life-threatening storm surges - waves of wind-driven seawater flooding along the coast - of up to 12 feet (3.7 meters) in some places.

Forecasters also warned of intense thunderstorms and possible tornadoes, with up to 2 feet of rain expected in parts of central Florida as the storm moved further inland.

"This is a storm that we will talk about for many years to come, an historic event," said Ken Graham, director of the National Weather Service.

The region around the landfall is home to miles of sandy beaches, scores of resort hotels and numerous mobile home parks, a favorite with retirees and vacationers alike.

But the storm soon transformed idyllic coastal towns into disaster zones.


An hour after landfall, video posted on social media and local TV stations showed water fueled by storm surge rushing through several communities, nearly reaching rooftops.

The town of Fort Myers Beach was almost submerged by floodwaters, and the ruins of homes could be seen floating downstream, along with cars.

A view of Sanibel Island posted on Twitter showed the ocean rushing over a seawall and gushing into a resort hotel's swimming pool.

Other video from the island showed roads inundated by the storm surge, rising to the tops of street signs, with palm trees bent sideways amid a torrent of near blinding rain and wind as waves crashed up a beach onto a road.

In terms of its sustained wind speeds, which peaked at 155 mph before landfall, Ian ranks as one of the most ferocious hurricanes to strike the U.S. mainland in recent years.

By comparison, Hurricane Michael came ashore in Florida's panhandle in 2018 with steady winds of 155 mph, while Ida last year packed sustained winds of 150 mph when it landed in Louisiana.

The Weather Channel reported that Ian made landfall in the exact same point on Cayo Costa where Hurricane Charley came ashore in 2004 as a Category 4 storm.

Both hurricanes packed winds of 150 mph at landfall.

Ian knocked out power to at least 1.1 million homes and businesses so far, local utilities reported.

Cuba was still struggling to restore power a day after Ian hit the island, with most of the Caribbean nation's 11 million residents still in the dark.

The NHC said hurricane-force winds would extend outward up to 45 miles (75 km) from Ian's center, with tropical storm-force winds reaching as far away as 175 miles (280 km).


Even as Ian lashed Florida's Gulf Coast with fierce winds and drenching rains in the final hours before it swept ashore, authorities warned residents it was too late for anyone who had yet to evacuate to safely do so.

Earlier this week, authorities told more than 2.5 million residents to evacuate.

Doug Coe of Venice was one of those residents who chose to ignore warnings and stay put.

As he walked through rainfall on Wednesday morning, Coe admitted to never experiencing a storm of such magnitude, but he seemed unfazed by the impending threat.

“You have to be vigilant because you never know what’s going to happen with it,” he said.

“I’m staying vigilant, but trying not to worry.”

The region is dotted with mobile home parks, which most residents had abandoned, taking refuge in local schools and other facilities converted to emergency shelters.

The area's numerous assisted-living facilities were mostly evacuated, too.

Heart is Venice, an assisted-living home north of Venice, was an exception.

Of its 107 residents, 98 decided to stay put with staff and some family members, general manager Michelle Barger said.

The facility, opened two years ago, had stocked up in advance with food, water, medication and other provisions and was built to withstand a Category 5 storm, Barger said.

"Our community is locked down."

"We're secure and we're prepared for this," she said.

Climate change is making hurricanes wetter, windier and more intense.

There is also evidence that it is causing storms to travel more slowly, meaning they can dump more water in one place, scientists say.

"Hurricane Ian's rapid intensification could prove to be another example of how a warming planet is changing hurricanes," said Kait Parker, meteorologist and climate scientist at IBM's

"Research shows we are seeing this far more often than we did in decades past."

Reporting by Brad Brooks in Sarasota and Brendan O'Brien in Washington; Additional reporting by Jarrett Renshaw, Leah Douglas and Tyler Clifford in Washington, Rich McKay in Atlanta and Dan Whitcomb in Los Angeles; Writing by Brendan O'Brien and Steve Gorman; Editing by Frank McGurty and Lisa Shumaker ... 022-09-28/
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Post by thelivyjr »


"Record number of UK mortgage deals pulled in one day as market mayhem takes hold"

Sophie Kiderlin @SKIDERLIN



* Hundreds of residential mortgage deal offers in the U.K. have been pulled, with HSBC, Santander and NatWest becoming the latest major lenders to pause or change their offerings.

* Concerns about mortgage rates becoming unaffordable have spiked as fears of the base rate rising to 6% next year spread.

* British bond and currency markets have been in turmoil since Finance Minister Kwasi Kwarteng announced a “mini-budget” on Friday.

* Overall, 935 mortgage products were pulled from the market on Tuesday, according to data from money comparison site Moneyfacts.

LONDON – Hundreds of residential mortgage deal offers in the U.K. have been pulled after market chaos sparked concerns about base rates rising as high as 6% next year.

Overall, 935 mortgage products were pulled from the market on Tuesday, according to data from money comparison site Moneyfacts.

The company said this was the largest ever daily drop on record, with the previous high being 462 when the first U.K. Covid lockdown was announced in 2020.

HSBC and Santander are the latest major U.K. lenders to pause their mortgage product offerings, while NatWest repriced their products, increasing rates.

Santander said they halted some products for new customers and increased rates for both existing and new borrowers but would review their decisions “in light of market conditions.”

NatWest and HSBC did not immediately respond to CNBC’s request for comment.

Earlier in the week, Virgin Money, Halifax and Skipton Building Society temporarily pulled some of their mortgage deals citing market developments.

Concerns about mortgage rates becoming unaffordable have spiked among borrowers and lenders.

There have also been reports of house sales falling through as lenders backed out of previously agreed mortgage deals due to market uncertainty.

The U.K. bond and currency markets have been in turmoil since Finance Minister Kwasi Kwarteng set out his “mini-budget” on Friday.

Following his announcement, which includes major tax cuts and a shift to “trickle-down economics,” the British pound fell to an all-time low against the dollar on Monday morning.

Meanwhile, the yield on the U.K. 10-year gilt soared to 14-year highs earlier in the week.

These major market moves sparked inflation fears among investors and led them to believe the Bank of England would implement further interest rate hikes.

The central bank said on Wednesday that it would intervene in the bond market and postpone selling gilts, while temporarily buying bonds.

Markets quickly began to price in a base rate as high as 6% for next year – which dramatically pushes up how expensive mortgages are for borrowers as the base rate is the benchmark for U.K. mortgage and loan products.

‘Borrowers would be wise to keep calm’

A research note from Pantheon Macroeconomics suggested that for households looking to refinance a two-year fixed rate mortgage, payments could jump up by as much as £627 ($670) per month.

Concerns have also been raised about borrowers having fewer options when trying to find a mortgage deal due to the market chaos, which could drive prices up even further.

Despite this, Moneyfacts finance expert Rachel Springall said borrowers shouldn’t panic.

“Borrowers would be wise to keep calm over the current volatility in the mortgage market and seek the advice from an independent broker."

"Various lenders have been very vocal that their decision to withdraw products is a temporary measure, amid the uncertainty over interest rates,” Springall said.

Speaking to CNBC’s “Street Signs Europe” on Tuesday, Imogen Bachra, head of U.K. rates strategy at NatWest, echoed a similar sentiment, explaining that she believed mortgage products being pulled is a temporary issue related to short-term market volatility. ... hold-.html
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Post by thelivyjr »


"'Where's Jackie?' Biden seeks lawmaker Walorski who died in August"


September 28, 2022

WASHINGTON, Sept 28 (Reuters) - U.S. President Joe Biden publicly sought out Jackie Walorski, an Indiana Congresswoman who died in a car accident in August, during a conference on hunger on Wednesday, seeming to forget that she had passed away.

Biden thanked other conference organizers, then asked: "Jackie are you here?"

"Where's Jackie?"

Walorski, a Republican, was one of four Congressional co-sponsors of the bill to fund the conference.

She was killed with two staffers in early August.

Biden moved past the issue without any correction.

After Walorski's death, the White House issued a statement from Biden that said he and his wife Jill were "shocked and saddened" by her sudden accident.

"Truly an awful and disgraceful blunder," Representative Vicky Hartzler, a Missouri Republican, tweeted in reference to the mistake.

Biden was “acknowledging her incredible work,” White House press secretary Karine Jean-Pierre said when asked about the incident later, adding that Biden had already planned to welcome the congresswoman's family to the White House for a bill signing on Friday.

“She was on top of mind,” Jean-Pierre said.

Reporting by Jarrett Renshaw and Leah Douglas; Writing by Heather Timmons Editing by Alistair Bell ... 022-09-28/
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Post by thelivyjr »


"Fed's Evans: Market volatility can create restrictiveness"

By Dhara Ranasinghe and Jorgelina Do Rosario

September 28, 2022

LONDON, Sept 28 (Reuters) - Federal Reserve Bank of Chicago President Charles Evans said on Wednesday that volatility in markets can create additional restrictiveness in financial conditions.

Global markets have been whipsawed this week by turmoil in UK markets, already on edge over aggressive rate hikes from the U.S. Federal Reserve and other major central banks.

"The U.S. economy and inflation are going to be largely dictated by the stance of monetary policy and everything else that is going on supply shocks, the labour issues we're dealing with," Evans said in London.

"It is a case that financial market volatility can add to additional financial restrictiveness."

"So anything around the world in terms of policy or developments like Russia's invasion of Ukraine can add to additional restrictiveness."

Still, speaking with reporters after an event at the London School of Economics, Evans gave no indication that any of that would blow the Fed off its course.

"We just really need to get inflation in check," Evans said.

It would be good, he said, to get the Fed policy rate - now at 3%-3.25% - to a range of 4.5%-4.75% by the end of the year or March, and then keep it there for a while.

Real rates currently are "not nearly restrictive enough," given high inflation, but by March should be around 2%, he said, enough to put downward pressure on prices.

Relief on inflation could also come from improvements in supply, he said, and giving him some comfort is the fact that inflation expectations are "relatively consistent" with the Fed's 2% inflation goal.

Reporting by Dhara Ranasinghe, Jorgelina Do Rosario in London and Ann Saphir in San Francisco; Editing by Matthew Lewis and David Gregorio ... 022-09-28/
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Post by thelivyjr »


"South Korean manufacturers' business sentiment slides to lowest in two years"

By Reuters Staff

SEPTEMBER 28, 2022

SEOUL, Sept 29 (Reuters) - South Korean manufacturers’ business confidence tumbled to its lowest level in two years in October, a central bank survey showed on Thursday, with companies citing sharp rises in raw material prices and an uncertain economic outlook.

The seasonally adjusted business outlook index for manufacturers fell to 73 for October, down from 82 for September, according to the Bank of Korea.

The index for the non-manufacturers stood at 81 for October, unchanged from September.

A total of 3,255 companies, including 1,676 manufacturers, were polled nationwide from Sept. 14 to 21, the central bank said.

(Reporting by Jihoon Lee; Editing by Edwina Gibbs) ... SP8N307028
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Post by thelivyjr »


"Bank of England to buy 65 billion pounds of UK bonds to stem rout"

By David Milliken

September 28, 2022


* Bank of England steps in to buy long-dated bonds

* 30-year yields tumble by 100 bps after BoE support

* BoE to buy up to 5 bln pounds of gilts a day until Oct. 14

* Gilt sales due to start next week postponed

* BoE still aims to reduce QE holdings by 80 bln stg

LONDON, Sept 28 (Reuters) - The Bank of England stepped into Britain's bond market to stem a market rout, pledging to buy around 65 billion pounds ($69 billion) of long-dated gilts after the new government's tax cut plans triggered the biggest sell-off in decades.

Citing potential risks to the stability of the financial system, the BoE also delayed on Wednesday the start of a programme to sell down its 838 billion pounds ($891 billion) of government bond holdings, which had been due to begin next week.

"Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability," the BoE said.

"This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy."

The central bank said it was still committed to an 80 billion-pound cut over the next 12 months in its holdings of bonds bought after the global financial crisis of 2007-08 and during the COVID-19 pandemic.

British 30-year bond yields had hit their highest since 2002 earlier on Wednesday and traders said it was becoming increasingly hard to buy and sell bonds as no one wanted the risk of holding such a volatile asset.

Pension schemes which operate liability-driven investment (LDI) funds to meet regulatory requirements had been selling long-dated gilts to meet emergency collateral calls or reduce exposure, pensions advisers said.

"There are schemes running out of cash at the moment," one pensions consultant said before the BoE intervention.

"This was a response to a fairly specific issue with the LDIs and the relationship they have with pension funds," a source familiar with the BoE's decision said.

Left unchecked, collapsing gilt prices could have caused a vicious cycle of fire sales of assets, pushing prices yet lower and creating more forced sellers.

After the BoE announcement, long-dated bond prices surged with 30-year yields plunging more than a full-percentage point, their biggest one-day drop in Refinitiv records dating back to 1992.

The central bank put no limit on the size of its intervention but said it initially planned to hold daily auctions to buy up to 5 billion pounds of gilts with a maturity of at least 20 years, between Wednesday and Oct. 14.

"The purpose of these purchases will be to restore orderly market conditions," it said.

The BoE bought 1.025 billion pounds of gilts out of 2.587 billion pounds offered in its first buy-back on Wednesday, rejecting offers it thought were priced too high.

From the BoE's point of view, the low number of offers will be viewed positively, suggesting its commitment to buy long-dated gilts is acting as a back-stop and easing a liquidity squeeze, without it having to make big purchases itself.


The BoE last intervened in the gilt market to stem market turmoil in March 2020, when the pandemic roiled markets, expanding its then-dormant quantitative easing programme by hundreds of billions of pounds.

In contrast to then, the BoE said on Wednesday that the intervention would be strictly temporary and would be "unwound in a smooth and orderly fashion once risks to market functioning are judged to have subsided".

Markets have baulked at the unfunded tax cuts that formed part of new finance minister Kwasi Kwarteng's first fiscal statement on Friday.

"(The BoE) have put something of a floor under the market in the short term."

"However, the pro-cyclical fiscal policy remains and as such the respite may not be long lasting," said Charles Diebel, head of fixed-income strategy at Mediolanum Asset Management.

The BoE's intervention reduced long-dated bond yields back to their level at the end of Friday - after the initial negative reaction to Kwarteng's statement - but shorter-dated yields were still higher.

Speaking on Tuesday, BoE chief economist Huw Pill said the BoE would only delay its planned sale of bonds if it saw market dysfunction, and it would not stop an orderly market repricing of the debt.

The BoE couched its intervention on Wednesday in terms of tackling a specific financial stability problem, rather than being a broader attempt to rein in yields.

Economists and investors said the central bank would be keen to avoid the perception that it was stepping in to finance the government, or that the market turmoil jeopardised its ability to take steps to return inflation to its 2% target.

"The likelihood of the market misunderstanding this policy change though is high and risks a potential hazardous misstep," said Bethany Payne, global bond portfolio manager at Janus Henderson Investors.

Reporting by David Milliken, additional reporting by Carolyn Cohn, Sachin Ravikumar and Dhara Ranasinghe; Editing by Catherine Evans, William Schomberg, Toby Chopra and Jonathan Oatis ... 022-09-28/
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