Why the BOE is Finding Corporate Yields Tough

The video discusses the impact of Brexit on the UK gilt market, highlighting the Bank of England's role in stabilizing gilt yields through quantitative easing. It also examines the challenges faced by the Bank in managing corporate bond yields, given the small size of the UK corporate market. The discussion extends to global bond yields, predicting a decrease due to ongoing global easing and the potential economic impact of Brexit negotiations.

What was the Bank of England's initial response to Brexit in terms of the gilt market?

• Reducing pension fund investments

• Increasing interest rates

• Selling off gilts

• Restarting quantitative easing

Why are UK pension funds likely to hold onto long-dated gilts?

• To match their liabilities with assets

• To reduce their exposure to risk

• To increase their liquidity

• To diversify their portfolio

What challenge is the Bank of England facing with corporate bond yields post-Brexit?

• The corporate market is too large

• Corporate yields are rising despite interventions

• There is no demand for corporate bonds

• Corporate bonds are outperforming gilts

How does the size of the UK corporate market compare to global markets?

• It is equal to the euro market

• It is a fraction of the size of the dollar market

• It is larger than the euro market

• It is the largest in the world

What is the expected trend for global bond yields in the near future?

• They will remain stable

• They will be lower

• They will fluctuate unpredictably

• They will increase significantly