What I don't understand about the DMO
FT alphaville has a post on the DMO at the tail end of last week, setting out the auction catalogue for the next quarter and setting out progress to date. It includes this summary of the year so far:
This squares with my understanding that the DMO has a policy to keep index linked issuance at less than 20% of the total. My question is why. There is massive demand for long-dated linkers from pension funds and life insurers. Given the need to sell a lot - really a lot - of gilts next year, why is the DMO not giving the market what it actually wants to buy?
This squares with my understanding that the DMO has a policy to keep index linked issuance at less than 20% of the total. My question is why. There is massive demand for long-dated linkers from pension funds and life insurers. Given the need to sell a lot - really a lot - of gilts next year, why is the DMO not giving the market what it actually wants to buy?
posted by David Murphy at 06:19
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