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Optobear

Debt Issuance - How Will The Markets React? - 5Th July Is Key Date

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First post in a long while...

But very relevant to how the markets will react and what that will do to the debate.

The Government issues debt and a calendar of all the planned issuance dates can be found here

http://www.dmo.gov.uk/reportView.aspx?rptCode=D5D&rptName=fa29db60-825e-4dc9-93a1-0ec538b00338||GILT%20MARKET%20(10)&reportpage=Issuance_Calendar

It shows the next planned debt issuance by the DMO will be on tuesday 5th July.

At that point the market will start to tell the government what it thinks. At the moment HMG is proposing to borrow at 1.5% for 5 years. Whether there will be takers is a key question?

Now set aside that they could borrow the money from HSBC more cheaply...

Whether Mr Carney will have to use his £250bn to buy them is another question... and before changes to the Bank Return we would have known within a week... now it is hidden from the people. More on that topic here:

http://www.housepricecrash.co.uk/forum/index.php?/topic/204683-do-posts-on-hpc-make-a-difference-i-think-so-and-here-is-an-example/?p=1102719084

So we won't know who buys but we will know how easily the government can get the debt away.

So look for some nerves in the market (and some brown trouser moments in government) in the days running up to the 5th July. If liquidity becomes a real problem then we might even see the issuance cancelled... (apologies for the scatological metaphor).

If the market isn't keen to buy UK Government debt then I think we'll see the pound in all sorts of pressure, we may need that emergency budget that Mr Osborne has gone quiet about, and perhaps, we'll see some mortgage deals withdrawn, and the first signs of winter for anyone with big mortgages.

Optobear

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Its hard to think.

At some point the market is going to say - Fck you.

The Gits have already had a few stutters.

Brexit is not going to make Gilts a lot less attractive.

I mean, anyone who bought Gilts offer sub-2% yield has just lost 10% of the capital.

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Thank you for this post Optobear. I haven't been around these parts for a good while myself. It's where I once came for information that appeared well in advance of when it did in the media explained in a way that I could understand. I have not taken so much interest in finance in recent years and thought I'd have a look around to see if China and Japan are still the major foreign holders of Gilts and couldn't find that information anywhere anymore. I had no idea that the Bank Return had changed. If you follow up on this post I will be looking out for it.

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I was looking at this myself on Friday . Not sure what the impact will be but with all the uncertainty it is definitely worth keeping an eye on.

My view is that the price will be a little higher but the auction will be fully subscribed.

Worth keeping a look on the Gilt futures markets too and the price to insure against default on Gilts. I expect that these will show the future direction.

Still, with £1.5 trillion of debt we don't have much to worry about.

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