One of the Bank of England's Monetary Policy Committee (MPC) announcements in August was the intention to buy up to £10bn of corporate bonds over an 18-month period, writes F&C's Ian Robinson.
The aim is laudable - reduce the cost of borrowing for UK corporates and help stimulate the economy while the uncertainty of Brexit hangs over it. The extra yield on offer from corporate bonds compared to government bonds is called the spread. Bond markets are global in nature and this spread is highly correlated across the world, particularly when comparing sterling with US dollars and euros. Any central bank will struggle to break this relationship because an element of arbitrage is possible with issuers able to choose the currency to issue and investors being able to choose the cur...
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