BoE ramps up its printing press

While keeping rates unchanged as expected, the BOE surprised many by ramping up their QE policy when they announced they will grow the size of its Gilt purchases by 50b pounds to 175b. They said while both capital markets and economic conditions have shown signs of stabilization, conditions are still fragile. In an immediate response, Gilts spiked, the Pound fell sharply and the FTSE rose to a 10 month high. The ECB left rates unchanged as expected. The FOMC meets next week and their treasury purchase plan will be a key area of discussion ahead of the Sept expiration of the plan. Better than expected data in Asia and Europe helped to lift their markets. Australia unexpectedly created jobs in July and German factory orders for June rose much more than the consensus. China fell for a 2nd day on concerns the monetary spigot won’t stay as open. Jobless Claims are expected to fall a touch to 580k while Continuing Claims may rise by 53k.

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