The gilt market will breathe more easily, following the announcement today that another £50 billion of quantitative easing assets will be released from the Bank of England.

The decision comes alongside a move to extend the range of gilts that will be bought under the scheme to shorter-dated paper of as little as three years (previously the minimum maturity was five years) and also longer-dated paper over 25 years.

To understand the importance of government purchases of gilts over recent months, it's worth looking at these graphs, which first appeared together in an Odey presentation to investors.

The first graph shows that gilt purchases have remained fairly stable, even though foreign investors have been pulling out of sterling.

The second graph breaks down exactly who has been buying the gilts that have been sold. The conclusions are 1) The private investors have not been  2) British banks have not been  3) Foreign investors have not been. In other words, the only real buyer of gilts has been the Bank of England.

 So essentially, if the Bank of England had today decided to suspend purchases of government paper, the gilt market could have had a nasty shock. As it is, it looks like the additional purchases on the cards will be taking place over a relatively short period of three months. By that time, the government will still have a huge amount of money left to raise.

Perhaps we should heed Crispin Odey's warning in his presentation. 'When Gordon sells we buy {he means gold} and when Gordon buys we sell.' I suppose a pedant might point out that in a way Gordon is selling the gilts, but I think you get his point.

Of course there is a contrarian view. Namely, that if the Bank of England did put its gilt purchases into reverse and the market believed this would hurt the wider economy, it would lead to risk-aversion, triggering gilt-buying by the private sector. Indeed, this is the current Capital Economics position.

Either way, for the moment gilt investors will be relieved that the status quo when it comes to demand for gilts is being maintained.