BoE Liquidity injection

The Bank of England will activate an emergency lending program on the back of worsening condtions domestically and europe. "We are not powerless in the face of the euro-zone debt storm," George Osborne said, according to reports of his speech. The program is called the Extended Collateral Term Repo Facility, under which auctions of short-term sterling liquidity can be held at any time. The Bank of England will start holding auctions of sterling liquidity with a maturity of six months, the Bank of England said. Osborne also said the Treasury would provide cheap funds to U.K.-based banks if they boost lending to British households and companies, dubbed "funding for lending." Meanwhile, BoE Gov. Mervyn King said at the same event that the central bank would not expand its quantitative easing program into private-sector assets. "It is strange that those in Parliament and the press who feel the central bank should not talk about fiscal policy are often the most enthusiastic to see the bank actually do it," King said.

Well this really spiced up the Short Sterling Market this morning as we had a 15 tick move up across the curve with spreads falling initially before retracing and now we trading what we were at the open. I managed to get long 2s, and some 1s in Sep13Dec13, and got out for a tick as well, as getting long -1s in Jun13Sep13. The extra volatility provided good opportunities which is a rarity lately but hopefully with the upcoming Greek Election results and Fomc meetings at the States will provide further tradable volatility.

Below is a video with some analysis on the moves over the past few days, as well as general thoughts.