FAST FIVE: Bond Portfolios In Var Shock Get BOE Help, But There's Plenty More Action To Come
Of course, immunizing a bond portfolio is just par for the course for liability-driven investors, but when rate volatility is what it is these days, it can at best cushion the variance in the realized rate of return — not insulate your portfolio completely from the maelstorm.
To the extent that the BOE's bond purchases obviate the need for liability-driven investors to post additional collateral — a step that would force many of them to sell other parts of their portfolio and entrench a vicious market circle — the move certainly does the job of an doctor at an A&E.
14, when the purchases are supposed to end.
Investors fully expect the BOE — already way behind the curve — to see the obvious and raise rates before its scheduled meeting.
What happens to the pound now.