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Can someone please explain the connection between BoE interest rates and relative demand for government bonds. My point is why would interest rates soar if there was a bond strike?

Taking the first stab...Government bonds have always been perceived as the lowest-risk place to invest your money. All other investments were riskier, so would need to deliver a higher return than owning a government bond, else why would you bother. The yield on government bonds is, therefore, the lowest interest rate available...the Base Rate. This is all contingent on the governnment being able to sell its bonds at the desired price. If investors don't buy, the price would fall relative to the coupon rate printed on the bond to make the bond more attractive, and the effective interest rate would go up. So, yes, if there was a bond strike, interest rates would be forced up (assuming the BoE isn't buying all the surplus bonds). There's lots more going on with overnight lending and repo rates, but it all revolves around the price of government bonds.

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