{"id":2974,"date":"2010-06-02T12:07:55","date_gmt":"2010-06-02T12:07:55","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2974"},"modified":"2025-03-27T15:49:01","modified_gmt":"2025-03-27T15:49:01","slug":"uk-money-numbers-safe-haven-foreign-buying-boosts-gilts","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2974","title":{"rendered":"UK money numbers: &#8220;safe-haven&#8221; foreign buying boosts gilts"},"content":{"rendered":"<p>Foreign investors continued to buy gilts and Treasury bills on a large scale in April, probably reflecting a flight of capital from the Eurozone as its sovereign debt crisis reached a crescendo. Gilt and bill purchases were &pound;13.1 billion and &pound;1.3 billion respectively versus &pound;14.2 billion and &pound;4.4 billion in March. Total buying was a record &pound;42.1 billion in the three months to April &ndash; almost sufficient to finance a public sector net cash requirement of &pound;42.6 billion.<\/p>\n<p>Other features of the April monetary data include:<\/p>\n<ul>\n<li>Broad money, M4, rose by a further 0.3%, pushing three-month annualised growth up to 6.6% versus just 0.2% in January. This acceleration defies pessimists who claimed that M4 would contract when the Bank of England stopped gilt purchases. (M4 here refers to the Bank&#8217;s preferred measure excluding money holdings of non-bank financial intermediaries.)<\/li>\n<\/ul>\n<ul>\n<li>Banks and building societies have partially compensated for the end of official buying, purchasing &pound;6.3 billion of gilts in April and &pound;13.5 billion in the latest three months.<\/li>\n<\/ul>\n<ul>\n<li>While the M4 pick-up is welcome, the sectoral breakdown is less encouraging, showing money holdings of non-financial corporations falling over the last three months. The corporate liquidity ratio, nevertheless, has recovered significantly since early 2009, supporting expectations of a revival in business investment and hiring &ndash; second chart.<\/li>\n<\/ul>\n<ul>\n<li>Narrow money trends, also, are slightly disappointing, with M1 expansion slowing to 2.7% annualised in the latest three months. Annual growth of 4.8% is much lower than in the Eurozone &ndash; 10.7%.<\/li>\n<\/ul>\n<ul>\n<li>M4 lending to households remains sluggish while non-financial corporations continue to repay bank borrowing, reflecting their strong net free cash flow surplus. Weakness in credit demand, however, could be starting to abate &ndash; the stock of unused facilities granted by banks rose slightly in the three months to April.<\/li>\n<\/ul>\n<p>Monetary trends, overall, remain consistent with solid economic growth and may not prevent a continued inflation overshoot &ndash; the non-inflationary rate of broad money expansion has probably fallen well below historical norms as the demand to hold money has been depressed by negative real interest rates.<\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/graphs\/uk-gilt020610.gif?__SQUARESPACE_CACHEVERSION=1275483035574\" alt=\"\" \/><\/span><\/span><br \/><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/graphs\/uk-bus020610.gif?__SQUARESPACE_CACHEVERSION=1275483053529\" alt=\"\" \/><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Foreign investors continued to buy gilts and Treasury bills on a large scale in April, probably reflecting a flight of capital from the Eurozone as its sovereign debt crisis reached a crescendo. Gilt and bill purchases were &pound;13.1 billion and &pound;1.3 billion respectively versus &pound;14.2 billion and &pound;4.4 billion in March. Total buying was a [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2974","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2974","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2974"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2974\/revisions"}],"predecessor-version":[{"id":5283,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2974\/revisions\/5283"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2974"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2974"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2974"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}