BOE spillover tomorrow?
The trade is expecting the BOE to up its asset purchase program at tomorrow's meeting. Surveys point to a 50 bln increase, which will expand the asset program to stg 325 bln. The move by the BOE will work to reduce the the amount of "high quality" paper available to the global debt market. From a supply/demand perspective, the event will be a plus for treasury prices. From an inflation perspective, central bank activity continues to aim toward generating either stable or higher inflation. The 10 year gilt yield is about 20 bps above the UST 10 year yield. The average over the past 10 years is about 34 bps with a standard deviation of 33.8 bps.
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