BOE: MPR forecasts will be harder to interpret when they are "staff" projections
May-09 09:03
- This change to using staff forecasts rather than trying to come up with an MPC "best collective judgment" is similar to the ECB's forecasting process. There still needs to be sign off from the MPC that the forecasts are broadly appropriate, but the forecasts are potentially less representative of the MPC's views.
- However, the MPC doesn't have one set of views and as we know given the differences of opinions between different MPC members, it was probably made difficult to sign off on forecasts.
- The change does mean that it's harder to interpret the signals from the forecasts as the MPC endorsing or challenging market pricing for example. But it is reasonable to think that there will still be a high degree of input particularly from internal MPC members - in particular Huw Pill the Chief Economist.
- Bailey also notes that the staff come up with the scenarios. Obviously they will be under guidance from the MPC, but this is all part of a bit of loss of control of the forecasts from the MPC and more responsibility for the staff themselves.
- The speech also notes that as we move away from fan charts the "key judgments" will become increasingly valuable - that is something that has been emphasised a lot in recent MPRs.
- It's not quite clear how the May MPR forecasts were formulated - if they were under the new "staff" approach or the MPC's "best collective judgment" approach at this stage.
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GILT AUCTION RESULTS: 4.375% Mar-30 Gilt
Apr-09 09:03
| 4.375% Mar-30 Gilt | Previous | |
| Amount | GBP4.50bln | GBP4.25bln |
| Avg yield | 4.142% | 4.311% |
| Bid-to-cover | 2.95x | 3.39x |
| Tail | 1.0bp | 0.3bp |
| Avg price | 101.009 | 100.269 |
| Low price | 100.963 | 100.254 |
| Pre-auction mid | 100.985 | 100.250 |
| Previous date | 05-Mar-25 |
BUNDS: Trading back at pre Cash Open level
Apr-09 08:51
- The German Bund is now back above where it was trading at on the Cash Open, when it fell a quick big 115 ticks, as Govies caught up with some of the big moves seen Overnight in Treasuries.
- Bund was trading at 130.25 pre Cash Open.
- The earlier bid in Risk has ran out of steam, and the selling looked to be Cash led in European Equities, although nothing big in terms of moves.
- US Tnotes has already seen over 1.2mln traded lots for this time of the Day, but the contract has stayed in a fairly tight range since the EU Open.
- Since Bund is up 36 ticks and US Tnotes is down 19.5 ticks, the Tnotes/Bund spread widens another 9bps and look to test the 175bps resistance right here.
COMMODITIES: Gold Moves Affirm Bullish Case
Apr-09 08:49
The trend condition in Gold remains bullish and the latest pull back appears corrective. Moving average studies are unchanged, they remain in a bull-mode position highlighting a dominant uptrend. A bearish theme in WTI futures remains intact following the recent impulsive sell-off and the contract has again traded to a fresh cycle low, today. Recent weakness has resulted in the breach of a number of important support levels.
- WTI Crude down $2.07 or -3.47% at $57.53
- Natural Gas up $0.02 or +0.63% at $3.488
- Gold spot up $60.21 or +2.02% at $3046.08
- Copper up $1 or +0.24% at $415.75
- Silver up $0.45 or +1.5% at $30.2371
- Platinum up $0.5 or +0.05% at $922.51
