Wednesday, Mar 25, 2009
Gilt auction fails
Debt management office (DMO): Gilt auction press release
For the first time for many years, a Gilt auction has failed to be fully covered.
The sale of 1.75bn of 4.25% 2049 Gilts, though small compared to most auctions, was only 93% covered. Long dated gilt prices have fallen sharply today as a result.
Is this the start of the flight from Gilts, and the rise of interest rates?
Posted by uncle tom @ 02:20 PM (765 views) Add Comment
5 Comments
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1. inbreda said...
This is interesting. I wish I understood more. I notice the price of gilts has gone down dramatically over the last few days. Doesn't this paint Brown into a corner?
2. uncle tom said...
In a week's time, there is another sale of £3.5bn 2015's, which (being short dated) will probably be covered easily; but the following day, on April 2nd, there's a £2.25bn sale of 2039's.
If that sale fails, there will be a major loss of confidence...
3. Mike said...
So what happened in '95? (the last time this happened)
4. dohousescrashinthewoods said...
Interesting indeed. I'm no expert, but that sounds like one more death knell for those with ears. Soon the clock will have struck twelve.
Here's what I see:
- interest rates slashed until real rate is below zero
- money printed, more to follow
Sounds to me like the economy just blew up.
Now investors stop buying debt. Gordon will have to print more money, making debt even less attractive to investors because it will be worth less when it is repaid. Even less is bought, even more is printed.
And all the while the BBC coos to the people in the name of keeping order whilst the ship goes down.
If you turn off the "telly" and look at the facts, it's very serious.
5. tyrellcorporation said...
Brown is probably cooking up a plan to have certain banks sneak in and buy these gilts at the coming auctions so as not to embarrass him at the G20 summit.