BoE sells GBP 725mln short-maturity Gilt: b/c 2.43x

A bid-to-cover in the low-to-mid twos is within the range these operations have typically attracted and, taken alone, does not signal indigestion; the pattern in past sales has been that short-maturity buckets clear more comfortably than longs, where duration demand is thinner and cover ratios have on occasion dipped. The operative question at each sale is not the single print but the trend in cover and tails, since a run of weakening demand would raise questions about the pace of the unwind ahead of the MPC's periodic decisions on the stock reduction target. The distinction that matters is between active sales and gilt redemption flows, which together with DMO issuance determine the gross supply the market absorbs. The follow-ons are the next operations in the calendar by bucket, any shift in accepted yields relative to secondary levels, and the Bank's communications on the unwind pace.