An auction addendum…

So, while we were knee-deep in game theory trying to determine the best way to sell gilts, the Bank of England had some trouble buying them.

The BoE’s purchase of long-term government debt fell short of target Tuesday, which is noteworthy for plenty of reasons. One is that it’s yet another sign of that safe-asset shortage. But the thing is, the competitive bids are intermediated by banks and dealers. And that calls attention to a BIS paper from last month, which shows the results aren’t always pretty when economic policy collides with the zero-sum world of trading.

Continue reading: An auction addendum…

So, while we were knee-deep in game theory trying to determine the best way to sell gilts, the Bank of England had some trouble buying them.

The BoE's purchase of long-term government debt fell short of target Tuesday, which is noteworthy for plenty of reasons. One is that it's yet another sign of that safe-asset shortage. But the thing is, the competitive bids are intermediated by banks and dealers. And that calls attention to a BIS paper from last month, which shows the results aren't always pretty when economic policy collides with the zero-sum world of trading.

Continue reading: An auction addendum…