Third quantitative easing heavily oversubscribed even at £3Bn

The largest QE Auction to-date at £3Bn received bids at £21.98Bn - a multiple of 7.35 X

The BoE has yet to annnounce the funds available for Monday 23 March but given the appetite it seems logical that the figure may rise either on Monday or at least in time for Wednesday. The benefit has yet to filter through but there does seem to be a strong appetite for this programme which is encouraging.

Second quantitative easing was again well subscribed

There was no surprise that again non-bank institutions yet again didn't subscribe to the Monday 16th morning auction and that the banks again offered up more gilts than were available at £6.8Bn - effectivley 3.4 times oversubscribed. The initial auction was 5 times oversubscribed.

For Wednesday' auction the funds available are £3Bn. There is obviously a desire to create liquidity as evidenced by the the big demand. If the BoE makes too much funding available in any auction and there wasn't a full take-up in funds then ther might be a loss of confidence in the APF programme. 

For now we just want to see SWAP rates easing slightly and 3 month LIBOR rate starting to show a greater effort to move down towards BBR - today it is currently 1.84% against 0.5% !!!!

You can follow our regular updates on our quantitative easing pages.

First Quantitative Easing Auction oversubscribed by Banks this afternoon

The first Quantitative Easing Auction today attracted no takers from the non-Bank Sector this morning but the Banks piled in big style at £10.5Bn against the available £2Bn at 2.15pm this afternoon.

The question is now whether that the momentum will continue and will the money supply start to improve? This should be measured in two ways ....

• SWAP rates noting gilt yields easing unless HMG issue too many out of the "back door"


• 3 month LIBOR rate coming down fromm its plateau at 1.91% and trying to establish some connectivity with BBR at 0.5%

We are not holding our breaths but this APF does offer some transparency and may at last encourage a bit more open dealing out there...ultimately it will lead to improved mortgage and business finance supply.

You can keep up to date on our quantitative easing updates and views online.

Lloyds /HBOS agree to additional £9Bn of business lending this year

The announcement of Lloyds/HBOS finally doing a deal with the Gov't in the APS shoulds bring an additional £9Bn of business lending to beleagured borrowers in 2009.

The deal was finally concluded over the weekend (7 and 8 March) in which some £260Bn of "assets" were moved into the APS and the Gov't stake in the lender moved to 65% and the lender committed to an additional £9Bn of business lending and £3Bn of additional mortgages (residential mortgages and Buy To Let mortgages).

Welcome news, at least in theory, and when added to the commitmenbts also made by RBS there should be some relief in sight for some businesses. Our concern is that previous supplies of liquidity - see our web page - have mysteriously failed to materialise at the SME level and is there any "audit trail" to ensure that previous mistakes are not repeated.

We are going to "track" as best we can the outcomes on the other latest Gov't initiative - Asset Purchase Facility (APF) and keep you updated on both the web and this blog !!!!