MBS Day Ahead: Boosted by Bank of England Rate Cut Ahead of NFP


Posted To: MBS Commentary

Bond markets are stronger out of the gate this morning as the Bank of England (BOE) followed through on expectations to cut its key policy rate from 0.5 to 0.25. This is the first cut since 2009. Most members also noted that they expected another rate cut "close to, but a little above zero." In addition to the rate cut, the BOE upped the pace of its stimulus efforts with 2 new programs. One of these is a simple increase in bond buying (non-financial corporate bonds). The other is a "term lending" facility, essentially meaning greater access among banks to cheap, short term money intended to facilitate the new, lower target interest rate. Taken together, the easing efforts are a little more than markets were expecting. By the time we consider the BOE cut its GDP forecast…(read more)

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