Afternoon comment courtesy of Spreadex

Global markets continued to tread with caution today as investors digested news from the Bank of England meeting that there was an unanimous vote against extending the current bond purchase.  Policy makers decided that before committing to an extension, they required further information concerning future interest rates.  The news was particularly surprising to investors, as the same policy makers backed the current pace of bond purchases at the last meeting. 

Sterling stormed forward against the dollar following the announcement as currency traders were no longer concerned with the threat of dilution as a result of increased stimulus measures from the Bank of England.  However, with Bernanke due to speak later today as well as tomorrow the threat that Bernanke follows in the steps of the Bank of England’s’ retort could result in a sharp reversal. 

Concerns in Portugal are also playing on investors’ minds as the nation’s funding costs for 12-month Treasury bills surged.  Portugal did manage to offload its target of €1.5 billion worth of 5 and 12 month bills but at the expense of increasing yields from 1.232% to 1.720%, an indication that perhaps investors still find Portuguese debt a tad risky.