Lost your password?
Don't have an account? Sign Up

Bank of England’s Bond Market Nets $4.6 Billion Profit!

Bond Market to the Rescue of the UK market!

Rescuing the bond market turned out to be pretty profitable for the Bank of England.

Tweet on Bond rescue bet by BoE

Tullet Prebon

The U.K.’s central bank said Thursday it has finished selling off the stash of longer-term bonds it bought last fall to quell a historic rout in U.K. bond markets brought on by former Prime Minister Liz Truss’s plans for big tax cuts.

Some investors saw that episode as a warning to other governments to tread cautiously on spending plans amid rising global interest rates and decades-high inflation.

The central bank began unloading those bonds in late November. BOE data shows it brought in £23.1 billion ($28.1 billion) through the sales, netting a profit of around £3.8 billion ($4.6 billion).

A number of factors have driven U.K. borrowing costs lower (and thus, the prices of bonds higher) in recent months, including the reversal of Ms. Truss’s tax plans and her resignation after 45 days in office, new Prime Minister Rishi Sunak’s caution on spending, and hopes for a peak in global inflation.