BoE’s Bailey Sparks Market Chaos With Pension Fund Threat

After doubling-down on its pension fund bailout scheme, BoE’s Bailey spoke in Washington this afternoon, initially warning that “market volatility went beyond  bank stress tests” (which is scary), then reinforcing the “serious risk to UK financial system stability,” noting that the buying program is “temporary”.

But the piece de resistance was his noting that BoE will be out by the end of the week, adding a simple threat…

“My message to the funds involved and all the firms is you’ve got three days left now,” Bailey said at an event in Washington on Tuesday.

“You’ve got to get this done. The essence of financial stability, is that it (intervention) is temporary. It’s not prolonged.”

Or what?

Our tweet says it all…(Roughly translated: ‘you have 3 days to sell everything’)…

Was his teleprompter hacked? This is the dumbest possible thing you can say https://t.co/R9xIVOdDZP

— zerohedge (@zerohedge) October 11, 2022

“The way that the bank has structured this intervention is they can only buy assets if people put offers into them, but nobody is putting offers in,” said Craig Inches, head of rates and cash at Royal London Asset Management.

He said the pension funds would rather sell their riskier assets, including corporate bonds or property.

“If they sell gilts now, they’re doing it in the likelihood that they’ll need to buy them back in the future at some point and they might be more expensive, and that’s unhelpful,” he said.

And the markets reacted how one would imagine…

Stocks puked…

Cable was hammered lower…

And Treasuries were dumped…

Tomorrow morning in the UK is gonna be a shitshow!

All of which means…

On Friday the BOE will announce a Special Bond Monetization Operation

— zerohedge (@zerohedge) October 11, 2022