Stopping quantitative easing could spell doom for gilt yields

Whether markets will be able to absorb the huge government debt issuance that will be forthcoming once the Bank of England's quantitative easing programme ends is a hot topic at the moment.

As QE has propped up the gilt market, are gilt yields doomed to skyrocket once the BoE halts its quantitative easing programme? It is true the huge upcoming supply of government bonds will put upward pressure on yields, particularly once the support from ongoing QE buybacks has been withdrawn. A move toward higher yields once this significant market force is removed is a genuine concern right now. However I believe the consensus is exaggerating the risks the UK gilt market faces. One major concern is centred around the UK’s level of government debt. The IMF forecasts for 2009 the U...