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Scarce Paper Just Became Scarcer

04 August 2016 by lberuti

In the plate spinning competition that central banks have almost all entered around the world, there was a new twist today. The Bank of England announced a rate cut bringing interest rate to their lowest level ever at 0.25%. They also said their asset purchase program would increase GBP60Bln to GBP425Bln. As soon as the news hit the tape, it gave a further boost to the market was already benefiting from the positive tone which prevailed at the close yesterday. The new QE program of th BoE will include a corporate bucket, and cash which had been hard to come by in Europe since the ECB launched the CSPP just became even scarcer. If every credit joined the party, UK names benefited the most. Because they represent a large contingent in iTraxx Main, they helped outperform other indices