BoE's September APF reinvestments - TD Securities

"The ongoing support to GBP rates from a "no-deal" scenario could see an additional boost as BoE returns to the market for their APF (QE) reinvestments in September," argues TD Securities' Senior European Rates Strategist Pooja Kumra.

Key quotes

"Next week the BoE is expected to announce its reinvestment schedule for the maturing UKT 3.75% Sep 19 holdings under its APF programme. In nominal terms, the BoE holds £13.5bn of this issue, nearly half of the total outstanding (£28.7bn). The public's holdings for the bond stand at £13.5bn."

"From a strategic perspective, policy cuts by the BoE are still not imminent unless we get a disorderly Brexit. However, with global central banks on an easing bias, we think markets will struggle to remove the probability of the near term cuts."

"Furthermore, if the Brexit uncertainty continues, markets are likely to push back any form of policy normalization by the BoE. This should support wider spreads as cash receives the "bid to quality" support. Meanwhile, BoE's upcoming reinvestments in September also argue for wider swap spreads and Gilt performance vs peers."