BOE's Bailey: Message to pension funds is 'you have three days left to get this done'

• We saw quite a serious crystallisation of risk; that remains a live issue
• Very important to make clear gilt purchases are a financial stability intervention
• Pensions funds have the resources they need, bringing them over is the challenge
• LDI has increased its leverage Leverage In terms of trading, leverage can be characterized as a loan, supplied by a broker, which allows a trader to be able to control a relatively large amount of money with a significantly lesser initial investment. As such, leverage effectively allows traders to make a much higher return on investment compared to trading without any leverage. Traders use leverage to make a profit from smaller movements in certain assets, such as stocks and foreign exchange.Given such small movements in these instrum In terms of trading, leverage can be characterized as a loan, supplied by a broker, which allows a trader to be able to control a relatively large amount of money with a significantly lesser initial investment. As such, leverage effectively allows traders to make a much higher return on investment compared to trading without any leverage. Traders use leverage to make a profit from smaller movements in certain assets, such as stocks and foreign exchange.Given such small movements in these instrum Read this Term
• We have unprecedented volatility in the long end of the gilt market
• The BoE "will be out [of the market] by the end of the week"

This is a clear sign that the Bank of England Bank of England The Bank of England (BoE) functions as the United Kingdom’s central bank and is one of the key drivers of monetary policy in Europe. As one of the world’s oldest central banks and established in 1694, the BoE is owned by the British government. Its central mandate involves maintaining and targeting interest rates while using other tools to help either stimulate or contract the economy. Moreover, the BoE is responsible for producing the UK’s bank notes as well as supervising key bank payment sy The Bank of England (BoE) functions as the United Kingdom’s central bank and is one of the key drivers of monetary policy in Europe. As one of the world’s oldest central banks and established in 1694, the BoE is owned by the British government. Its central mandate involves maintaining and targeting interest rates while using other tools to help either stimulate or contract the economy. Moreover, the BoE is responsible for producing the UK’s bank notes as well as supervising key bank payment sy Read this Term is done with its emergency package. UK 30s are almost back to 5%.

An estimate this week indicated that pensions will need to sell £100-150 billion in assets to shore up liability driven investment (LDI) capital.

• UK and US have very tight labor markets
• Rise in long-term sickness is concerning for UK

Cable has stumbled back lower to 1.1074 in a quick move as Bailey dashed hopes for an extension.

A broad USD bid has also come on the comments.

Markets don't like central bank ultimatums.