Uk Plans To Sell Record Level Of Government Bonds

Uk Plans To Sell Record Level Of Government Bonds by Andrew Blumer last updated on April 06, 2023

UK Plans To Sell Record Level Of Government Bonds

The United Kingdom is reportedly trying to sell one of the highest amounts of government bonds in an attempt to limit the bond dealer's burden.

This comes at a time when the country is trying to recover from COVID-19, the banking sector crisis, and turbulence in the markets.

As per the details, the DMO plans to sell $291 billion or 241.1 billion pounds worth of government bonds. The sale will be carried out in the financial year of 2023/24. Earlier, the number of bonds sold during the financial year 2020/21 was 485.8 billion pounds.

So other than the number of bonds sold during 2020/21, the 2nd record is going to be for the financial year 2023/24.

According to analysts, the current situation in the market has become very tough. The Bank of England is trying to reduce its bond holdings every year by 80 billion pounds. So in a sense, the central bank of the UK is no longer a net buyer in the bonds market.

Low Chances Of Rate Hike By BoE

In the past few days, we have seen some major price swings in the currency as well as the equity markets. This is due to the fact that the market players are now adjusting their positions as well as their expectations for the interest rate.

Now that there are concerns about Credit Suisse and the SVB collapse, there's very little chance of any new rate hike.

According to Robert Stheeman (DMO CEO), the current situation in the global markets is highly volatile and stressful. If we look at the fixed-income markets, it is going through some extreme volatility.

Just last year, the UK experienced turmoil in its bond market when the Prime Minister announced tax cuts. At that time, the BoE had to intervene in the bonds market.

But this time, one major difference is that these movements in the bond market are not driven by the actions of the United Kingdom.