UK bond liquidity improves only slightly after BoE intervention

(Reuters) - The spread between bid and ask prices on UK government bonds, a key liquidity indicator, was only marginally tighter on Thursday than a peak seen before a Bank of England intervention to calm markets, according to ING Bank research citing Tradeweb data.

The Bank of England said on Wednesday it would buy some 65 billion pounds of long-dated bonds to calm the biggest sell-off in the country's debt in decades in reaction to its new government's tax cut plans.

The average of bid-ask spreads on 2-, 5-, 10- and 30-year gilts was at 6.225 basis points on Thursday, according to ING, down marginally from a peak 6.4 basis points seen on Tuesday, before the intervention. Tuesday's peak was the highest on record in ING's dataset going back to 2017.

The spread was at just 2.15 bps last Thursday, a day before the government's mini-budget, the data showed.

(Reporting by Yoruk Bahceli; editing by Dhara Ranasinghe)