FirstFT: BoE prepares to extend bond buying

The Bank of England has signalled privately to bankers that it could extend its emergency bond-buying programme past this Friday’s deadline, according to people briefed on the discussions, even as Governor Andrew Bailey warned pension funds that they “have three days left” before the support ends.

Bailey’s comments late yesterday came as pension funds raced to shore up derivative strategies before this week’s “cliff edge”. The industry has said it needs more time to avoid a repeat of the forced selling that prompted the BoE to launch the emergency support scheme.

Several bankers briefed by the BoE said officials were watching whether liability-driven investment managers, who help pension funds manage portfolio risks, have been able to build up enough cash reserves to meet margin calls.

The pound rose as much as 0.8 per cent against the dollar to $1.1057 today following the report that the central bank could extend the programme.

The BoE was forced to step in two weeks ago with a £65bn programme to buy government bonds to support pension schemes caught in a vicious circle after Chancellor Kwasi Kwarteng’s “mini” Budget triggered a historic sell-off in gilts.

But the scale of the central bank’s purchases has remained relatively modest even as chaos in the gilt market reignited on Monday. Here’s why.

Thanks for reading FirstFT Europe/Africa — Jennifer

Five more stories in the news

1. Volodymyr Zelenskyy asks G7 for air defences Ukraine’s president has called for faster supplies of air defence systems after Russian missile barrages struck civilian and infrastructure targets for a second day. Vladimir Putin has tapped Sergei Surovikin, notorious for campaigns in Syria, to reverse Russia’s battlefield fortunes in Ukraine.

“When Ukraine obtains enough modern and effective surface-to-air defence systems, the key element of Russian terror — missile attacks — will no longer work” — Volodymyr Zelenskyy

Do you think G7 countries should speed up supplies of air missile defence systems for Ukraine? Tell us in our latest poll, or email in your response to firstft@ft.com.

2. Low-carbon power generators face de facto UK windfall tax Onshore wind, solar, biomass and nuclear energy companies, which have benefited from high wholesale power prices, will face a revenue cap next year aimed at raising “billions of pounds”, the UK government has confirmed.

3. Twitter reviews user ban policy The social media company is reviewing controversial policies around permanently banning users, potentially bringing its content moderation closer to Elon Musk’s vision regardless of whether he becomes its owner.

4. IMF forecasts ‘very painful’ global economic outlook The IMF warned of a growing risk that the global economy slides into recession next year, projecting growth of just 2.7 per cent in 2023. Officials pointed to increasingly difficult trade-offs between governments and central banks.

5. UK insurers to take on more company pension schemes Insurers expect more companies to offload their pension schemes after surging government bond yields increased the appeal of such deals and market turbulence underlined the risks in managing retirement plans.

The day ahead

Nato gathering The transatlantic alliance will host a meeting of western countries to co-ordinate weapons supplies to Ukraine, two days after Russia launched its most extensive air strikes since the start of the invasion.

Scottish independence hearing The UK Supreme Court will hear a final day of arguments on whether Scotland’s parliament has the legal authority to hold an independence referendum without Westminster’s approval. A decision in favour of the UK government would impede first minister Nicola Sturgeon’s goal of holding a vote in October 2023.

Israel mulls Lebanon deal Israel’s security cabinet and government will meet to approve details of a deal with Lebanon over their shared maritime border. The Knesset will then have 14 days to review the deal before it is returned to the government for final approval.

IMF and World Bank annual meetings G20 finance ministers and central bank governors meet in Washington, with the world economic outlook and support for Ukraine among the topics likely to be discussed.

Economic indicators The UK releases August gross domestic product, which is set to decline from the month before, as well as industrial production and trade balances. The US publishes its September producer price index. The Federal Reserve releases minutes from its monetary policy meeting last month when policymakers implemented a third consecutive 0.75 percentage point rate rise. (FT, WSJ)

Join television presenter Trinny Woodall, English football player Ellen White and others at the FT Live event Women at the Top Europe Summit today at the Kimpton Fitzroy in London or online. As a newsletter subscriber, you can claim a 10 per cent discount on the in-person event using promo code Newsletters22. Register for your pass here.

What else we’re reading and listening to

Disease and war are shaping our economy It was not familiar economic forces that caused recent upheavals but Covid-19 and the war in Ukraine. This reminds us that the most destructive forces are indifferent nature and wicked humanity. As the latest IMF report outlined downside risks, Martin Wolf asks: what can and should be done?

CVC’s biggest bet yet Europe’s largest private equity company has made tens of billions of euros buying stakes in household-name brands from Debenhams to Formula One while remaining largely hidden from public view. Now, almost three decades in, CVS Capital Partners, with €133bn in assets, is planning to go public.

Liz Truss and business are at cross-purposes Liz Truss has repeatedly declared her determination to “grow the pie”. While the prime minister has correctly diagnosed that the UK has a growth problem, her recipe for a solution pits profit generators against pretty much everyone else, writes Helen Thomas.

Fumio Kishida prepares Japan’s defences The prime minister is by nature a dovish diplomat. But surrounded by increasingly hostile regimes in China, Russia and North Korea, Kishida has little choice but to reshape his nation’s defences, as he outlined in an interview with the FT.

Mind the gap! What women need to know about investing In this Money Clinic Investment Masterclass, Emilie Bellet, founder of Vestpod, talks to Claer Barrett about how to get started investing, when to start saving for a pension and why some of the myths around women investors are just that.

We asked, you responded

A global survey of Financial Times readers heard from many parents about the difficulties of juggling career and childcare, with some calling on policymakers and employers to help shoulder the costs.

“I had to make significant life changes. I moved from NYC back in with family in another state so that I could have the help needed to make it work” — Angela, a legal counsel in Baltimore