Key events in the UK this week - TDS

Analysts at TD Securities explained that the second BoE QE operation in the 15+ year Gilt bucket takes place and offered outlooks over the retails sales and CPI events for the week ahead.

Key Quotes:

"Last week’s operation was only 96% covered as sellers (which include many pension funds & insurers) were hesitant to part with their holdings. The BoE will want to avoid a second shortfall, so will likely buy above market value once again to secure it meets its weekly buying amount - we expect the operation to be fully covered.

Retails sales:  In the near-term, Brexit is about firms not consumers (housing market possibly aside). As a result, we expect July retail sales to grow from their June level. July’s rebound would be consistent with some of the noisy-ish retail-sector anecdotal reports during the month but perhaps more importantly, the weather was generally good across the UK. Brexit will bite eventually, but that is a medium-term story, not a short-term one.

CPI:  Renewed competition in the supermarket sector and lower consumer energy prices, despite the sharp depreciation in GBP in July, should lead to a downside surprise in June’s headline inflation. We see downside risks to the Bank of England’s recent forecast and consensus. Core inflation should decelerate slightly. Soft prices in the near-term (before FX pass-through kicks in) should give the BoE ample room to continue easing rates later this year."