Articles

We got the expected rate cut yesterday (8^th August), at the second time of asking but the closeness of the vote and Bailey's subsequent comments saw it interpreted has a hawkish cut. The committee was split, four to hold, four to cut by a quarter and one, Alan Taylor, to cut by a half at the first vote. Another vote was taken and Taylor joined those going for a quarter, so the final score was 5-4.

Bailey warned of a renewed inflation threat and said that the "finely balanced" outcome of this meeting should be noted by markets. This suggests they will not be in an immediate rush to follow suit and puts a question mark over what was an expected cut in November, the next meeting that coincides with a Monetary Policy Report. While noting that the rate path is still downward, Bailey said this was over time and that there is more uncertainty about when those steps are taken. The domestic situation and the softening labour market appear to have been what tipped him into voting for a cut.

The dialling back of market expectation on the next move saw the yield curve flatten, with short yields adding around five basis points and only one or two further out. The pound gained support on the prospect of yields staying higher for a bit longer. 

At this morning’s UK Treasury Bill tender, we are looking at the following issuance from the UK government over the respective terms. Our suggested range highlights the expected yields on offer and we will be placing clients appropriately. Here you can see the King & Shaxson expected ranges of where short term debt, ideal for cash and treasury management, is expected to be issued:  

Should you wish to know more about the UK treasury bill tender and how clients can benefit from this, please email [email protected].