london the bank of englands emergency bondbuying program draws to a close on friday with traders remaining on edge as volatility in the uk bond market looks set to continue the central bank initially announced the twoweek intervention in the longdated bond market on sep 28 having been informed that a number of liability driven investment ldi funds held by pension plans were hours from collapse as uk government bond prices plunged the market volatility was triggered by the british governments socalled mini budget on sep 23 which prompted widespread backlash over billions of pounds of unfunded tax cuts while spooking both bond markets and the british pound  finance minister kwasi kwarteng will now deliver an updated mediumterm fiscal plan on oct 31 the same day the bank of england has earmarked to commence selling gilts as part of its wider monetary tightening efforts the banks monetary policy committee then meets on nov 3 to determine its next move on interest rates and chief economist huw pill has indicated that the countrys new fiscal framework will necessitate a significant monetary policy response as policymakers look to rein in skyhigh inflation prime minister liz trusss government maintains that its sole focus is achieving 25 annual gdp growth but the focus on fiscal support for the economy means downing street and threadneedle street are pulling in opposite directions with the bank of england trying to tighten its belt to cool the economy and contain inflation the boes pill also highlighted that recent actions taken to ensure orderly market function and financial stability sought to preserve the effectiveness of monetary policy but should not be considered monetary policy actions in themselves bond yields which move inversely to prices soared again on wednesday after bank of england governor andrew bailey confirmed that emergency support mechanism would be withdrawn on friday leaving ldis with around 72 hours to shore up their balance sheets the 30year gilt yield hit 5 for the first time since before the banks historic intervention with gilt turbulence expected to persist at least until the governments fiscal update some economists expect the market to force more targeted assistance from the bank in the coming weeks its very probable that the bank of england will resume repurchases because two and two doesnt equal 22 – it is virtually impossible to wash out the massive amount of negative yielding bonds in the pension funds balance sheets without serious pain so its very likely that they will intervene in targeted ways and i would watch out because the next one is the ecb said daniel lacalle chief economist at tressis gestion what were living today in the uk is likely to be replicated by italy france germany even in the next few months luke bartholomew senior economist at abrdn noted the level of market uncertainty around the governments ability to deliver a credible fiscal package at the end of the month suggesting that volatility may persist and force further interventions from the bank clearly the bank is trying to dispel concerns around fiscal dominance where it would be forced into more permanent operations to support gilt yields in response to the volatility and repricing caused by the governments fiscal policy bartholomew said in a note wednesday while the bank certainly needs to reassert its independence and the primacy of its price stability mandate it is far from clear how credible such statements are given the degree of vulnerability exposed in the gilt market the temporary purchase program was only one of three components of the banks support package chris lupoli uk rates and inflation strategist at bnp paribas  told cnbc thursday that the bank of england remained focused on the temporary purchases serving as a backstop this is also exemplified by the different valuation approach they are employing at the auctions when compared to the approach of the historical monetary policy based qe purchases he said pointing to the relatively low values of daily purchases made by the bank up until wednesday it is also reflected in the fact that they have only purchased a fraction of the total initial maximum envelope although this is also a direct function of the low amount of bonds offered at the auctions lupoli suggested the temporary purchases were an incremental instrument in the boes financial oversight toolbox and may be deployed again in future should any analogous market dysfunction occur which the bank deems a threat to financial stability