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.
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