Gilts Spike After Cover Ratio In Today's 15Y+ POMO Tumbles, BOE Buys All Bonds At Premium

While last week the UK bond market breathed a sigh of relief when the BOE found more than enough willing sellers into its longest-maturity, 15Y+ repurchase, or POMO, operation, following the uncovered operation two weeks ago, today concerns have returned anew when moments ago the BOE reported that its GBP1.170 billion repurchase operation was covered "only" 1.54x, down nearly by half from last week's 2.93x, and suggesting that supply of longer-dated gilts may once again be getting scarce.

Gilts Slide After BOE 15Y+ POMO Closes Without A Glitch

The BOE buyback across the 15Y+ sector saw the offer-cover ratio rise to 2.67x after being uncovered at 0.96x last week. More notably, the bank bought most bonds at a discount of 7p-45p, with just three issues bought at a premium of 1p-9p. As a result of today's successful operation, Gilt futures slid and yields jumped, as the much-favored QE spot on the curve, 15-20Y sector, continued to lead losses.

Gilts Dumped After BOE Announces Latest QE Operation Was 4.71x Oversubscribed

After yesterday the BOE failed to attract enough selling interest to fully cover its long-maturity QE operation, bond traders were sitting on edge for the results of today's latest "POMO" open market operation, which concluded moments ago, to see if it too would have a shortfall in supply. That did not happen, and instead as the BOE revealed moments ago, there was a substantial GBP 5.51 billion in gilts offered for sale to the BOE, resulting in a comfortable, oversubscribed coverage of 4.71x.

Wall Street Reacts To The BOE's QE Failure

As first reported yesterday, in a striking development, the BOE failed to monetize all the longer-maturity gilts it had hoped to purchase on just the second day of its restarted QE operation, as it encountered something striking: an offerless bond market. Today Wall Street responds.

BOJ Leaks September Statement To Ease Investor Concerns That It May Be Tapering QE

To quell any speculation that it may be easing off in its "inflation boosting" monetization efforts, moments ago the BOJ "leaked" what its September statement would be, and as Reuters reported the BOJ has "already prepared a preliminary outline of a "comprehensive" assessment of its policies due next month that will maintain a pledge to hit its 2 percent inflation target at the earliest date possible, sources familiar with its thinking said." The general tone would suggest that a tapering of the BOJ's massive stimulus program is unlikely.

"Reality Of The Virtual" - The Most Bizarre, Post-Modern Analysis Of The Fed Yet

"The problem is not only economic, but also linguistic. For years now, it can be argued, the Fed’s role has extended from inflation and growth to stability of the markets and shifted towards maintaining symbolic order. Since the moment when unwind of the stimulus became the main theme, Fed has been acting increasingly as a symbolic authority. This is the reality of the virtual -- the real effects produced by something which does not fully exist. In this way the Virtual acts as the stable focal point around which all elements circulate."

Krugman Goes To Japan, Scolds Abe For Worrying About Quadrillion Yen Debt Pile, Leaves

“About two years ago, I had a pleasure meeting with you, Professor Krugman. We were talking during that time that a rocket has to go out of the atmospheric region, which means that an escape velocity has to be earned in order to lift the Japanese economy out of deflation and we were looking for a good speed to do that. We worry about the accumulated debt. That is a source of another concern. What to do about it?

Japan Curve Inverts After 10-Year Yield Drops To New Record Negative Low

It was just last week when we observed and reported a highly amusing example of what excessive central bank meddling hath wrought in DM government bond markets. Just nine days later, the very same dynamic that sent JGB 10s on a wild two-day ride played out again - only in reverse.

Sudden Plunge In Japanese Government Bonds Triggers Circuit Breaker, Halts Market For 30 Seconds

Just 24 hours after hitting record low negative yields, trading of Japan’s government bond futures was halted for 30 second after the price of the contracts dropped as much as 0.6% driven by a sudden, dramatic selloff in the 10 Year JGB. The Benchmark bond tumbled, pushing yields up eight basis points to minus 0.015 percent as of 2:51 p.m. Yields rebounded after dropping more than five basis points to a record minus 0.1 percent Tuesday.

Global Stocks, Oil Continue Streamrolling Shorts On Last Minute Hopes For G-20 Stimulus Announcement

With the conclusion of this weekend's G-20 unknown, and many still expecting a major stimulus, the squeeze will likely continue into the close of trading ahead of the  weekend when nobody will want to be caught short into what may end up being another global coordinated intervention to prop up markets. “With a lot of policy events coming there is a fair chance of more stimulus plans so the markets can squeeze higher,” said Benno Galliker, a trader at Luzerner Kantonalbank AG. "The big reversal shows that there is some expectation building up into those events."

The Curious Case Of "Strong" January Durable Goods: It Was All In The Seasonal Adjustment

According to a report by Mitsubishi UFJ's John Hermann, one of the most important, if volatile, series in the overall monthly update, that of commercial aircraft orders made absolutely no sense. As he notes, in January Boeing reported a 70% drop in actual aircraft unit orders (the same in dollar terms), and yet according to the Department of Commerce, the matched series of nondefense aircraft orders soared by 54% in January. How could this be? Simple: seasonal adjustments.

Here Is The Reason For The Sudden Buying Spree

Deja vu all over again. Just as we saw after yesterday's "glitch" in POMO unleashed a huge short-squeeze buying rampage, so today's "technical issue"-delayed 7Y Auction has sparked panic-buying in stocks...