Well, no, not really

The global bond markets, which handle hundreds of billions of trades every day,

Hundreds of billions in nominal value, yes, but not hundreds of billions of trades. Not even HFT is causing that….HFT not being as large a part of bond markets as it is in equities anyway.

But then The Guardian really falls off the edge:

At the outset of the Covid-19 outbreak, bond markets froze as investors panic bought highly rated government bonds and the number of sellers shrank.

The US Federal Reserve, the Bank of England, the Bank of Japan and the European Central bank, which oversee the largest debt markets, stepped in to expand the number of bonds on offer and promised to meet demand while the crisis continued.

Demand has been supported by the Bank of England’s pledge to “create” £200bn of electronic funds to purchase more bonds as part of its quantitative easing programme, adding to the £435bn of assets on its balance sheet.

Increasing the supply of bonds by offering more for sale is entirely sensible here. But it’s hardly “supporting” demand, is it? It’s meeting it.

8 thoughts on “Well, no, not really”

  1. There is something odd afoot

    Bank of England is implicitly if not explicitly financing UK government spending. An example of this was that we issued some £3 billion of a 2028 Gilt last week and on the same day the Bank of England bought £1.4 billion of the 2029 Gilt which looked to all the world like a spread trade

    https://notayesmanseconomics.wordpress.com/2020/04/06/mr-bean-and-two-barons-are-pressing-for-monetary-financing-in-the-uk/

    And yesterday we had this announcement “The Bank of England will buy some £4.5 billion of UK Gilts today and HM Treasury has issued some £3.25 billion. So in NET terms UK INC will buy some £1.25 billion rather than sell.”

  2. All governments to investors: Pull your money out of the private sector and buy lots of our bonds so we can rescue the private sector.

  3. Off topic –

    In the news – A group of doctors are calling for gambling adverts to be pulled as they fear that gamblers with too much time on their hands could be vulnerable.

    Not in the news – A group of gamblers are calling on doctors to STFU as they fear that doctors with too much time on their hands are scrambling around to find some other way of staying in the news and interfering in peoples’ lives

  4. @Diogenes
    Is there a single financial journalist on the major papers who has a clue?
    No. Not even in what we used to refer to as the financial press: the FT and The Economist. Sad decline.

    There’s another article in The Times today, bemoaning Google UK having £X revenues, but only paying £Y tax, despite (sic) paying staff £Z (behind paywall of course):
    https://www.thetimes.co.uk/edition/news/google-pays-only-44m-in-tax-but-its-staff-get-234-000-each-5zvtn06xt

  5. Off topic – Have you read about the row between Stelios Haji-Ioannou and easyJet over the latter’s Airbus order? This quote seems particularly Worstallian:

    “We must stop this river of money from the Bank of England via Luton Airport to Toulouse where Airbus is based.

    This is a misuse of taxpayers’ money.

    If the French government wants to spare Airbus from the cost of aircraft order cancellations, so they can keep French people in jobs, then they must give such support as French state aid and not expect a British airline to foot the bill.”

  6. @Andrew C

    More using a crisis to extend control forever

    Stasi are back in Germany

    German Public Law Professor, High Court Judge: Climate Crisis “Requires Freedom-Limiting Measures”
    https://notrickszone.com/2020/04/04/german-public-law-professor-judge-climate-crisis-requires-freedom-limiting-measures/

    Germany, true to its DNA, is once again gravitating towards dictatorial rule. A number of leading figures are praising the corona restrictions as an example of what needs to be done to fight the climate crisis.
    .
    One example figure is German public law professor Thomas Schomerus, who writes at his blog that “lessons for the climate crisis can be drawn from the corona crisis.”
    .
    Make people fear for their lives

    He is calling for an “enabling act” . History should give every German (and non -German) reason to question, indeed fear, the proposal:
    (from Wiki)
    “The Enabling Act (German: Ermächtigungsgesetz) of 1933, formally titled Gesetz zur Behebung der Not von Volk und Reich (“Law to Remedy the Distress of People and Reich”),[1] was an amendment to the Weimar Constitution[citation needed] that gave the German Cabinet—in effect, the Chancellor—the power to enact laws without the involvement of the Reichstag

    @Diogenes

    If BoE buying more than it’s selling, isn’t that injecting cash into economy?

    @Andrew M

    +1 read about that last week, Stelios pushing Easyjet to cancel/delay iirc 130 Airbus purchases – he’s correct. Don’t airlines usually buy an option to purchase? Lot’s ordered Concordes then pulled out

    Good again that BAE sold their Airbus stake and shareholders blocked insane merger with EADS

  7. Blimey

    “The EU’s most senior scientist has resigned with a passionate denunciation of the bloc’s reaction to the coronavirus pandemic, claiming he has been blocked from funding treatments and vaccines.

    Mauro Ferrari, the president of the European research council, said he had been “deeply disappointed and disturbed” by the EU’s efforts in reaction to what he described as “a tragedy of possibly unprecedented proportions”.

    Ferrari resigned by sending an email. He writes: “I have been extremely disappointed by the European response to Covid-19, for what pertains to the complete absence of coordination of health care policies among member states, the recurrent opposition to cohesive financial support initiatives, the pervasive one-sided border closures, and the marginal scale of synergistic scientific initiatives.

    I have lost faith in the system itself. And now the times require decisive, focused, and committed actions – a call to responsibility for all those that have an aspiration to make a difference against this devastating tragedy.”
    https://www.youtube.com/watch?v=8WHKRTdaigs

    As did UK almost 5 years ago, yet we’re still not free

    – BREXIT – We HAVE left the EU! Sunak lectures British journo
    https://www.youtube.com/watch?v=MSlZleiBWwc

    – LBC’s correspondent in France tells Nigel Farage about their shocking lockdown punishments
    https://www.youtube.com/watch?v=nr5psOlOVOU

    Check out their minority communities in Paris: no lockdowns there as plod too scared to enforce – plod should use whips as in Pak etc

    – Donald Trump turns angry after CNN questions “wonder drug”
    https://www.youtube.com/watch?v=nSgkVEFXJUg

    Trump spot on: try it, don’t do year long testing/trials

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