Money can’t buy you Bonds

The Bank of England is in the market for gilts. The latest QE plan (announced 9 August) is based on an assumption that as buyers of gilts, the Bank of England would find sellers. The problem with that assumption is simple. The owners (largely financial institutions) are reluctant to sell, particularly their longer dated assets. As a result, the Bank of England failed to buy as much as required, calling into question the viability of the wider QE programme. And this problem appears unlikely to go away anytime soon given the difficulty that long term pensions and savings plans face generating a sufficient return. Why would you sell to the Bank of England at the moment? If the Bank of England want yields to go down, your prices are going up.