Recent Trading Articles

Sunset Monday, March 20, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • Volatility is still the name of the game. Initial optimism following the Credit Suisse – UBS deal, brokered by the Swiss government over the weekend, abruptly ended in Asian dealings. US yields reversed a 18 bps move higher to trade more than 20 bps lower as European investors braced for the open. German yields even topped that, going down almost 30 bps (2y) shortly after the bell. The sharp risk-off repositioning originated from a specific niche in the bond market: AT1 (perpetuals, CoCo’s…). Under …

Monday, 20 March 2023 Please  click here  to read the PDF version Markets •          Core bond yields at least tried to keep their heads above water. After opening on Friday near Thursday’s post-ECB closing levels, trading soon revolved again around expectations for Swiss policymakers to try to hammer out a solution to the Credit Suisse problems in the looming weekend. Safe haven flows made US yields crash 7.5-32 bps, the front end outperforming. German yields tanked 15.5-22.5 bps. Peripheral yield spreads vs. Germany’s 10y yield rose. Italy and Greece lagged peers, adding 4 and 5 bps respectively. Equity markets in …

Sunset Friday, March 17, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • Yesterday, it took some time for (money) markets to assimilate ECB Chair Lagarde’s message that there is still ground to cover for the ECB as inflation is staying too high for too long. Markets reluctantly moved to discount one additional 25 bps hike in the spring. Quite a similar reaction function occurred on expectations for the Fed’s tightening cycle going forward. Even as market tensions eased, money markets weren’t prepared to put much hard money on the table for a scenario of US …

Friday, 17 March 2023 Please  click here  to read the PDF version Markets •          The Credit Suisse liquidity stopgap helped restore some calm in the run-up to the ECB meeting. The central bank pushed through with its flagged 50 bps rate hike despite recent financial stability concerns. They lifted the deposit rate from 2.5% to 3% as inflation is projected to remain too high for too long (>2% over policy horizon). From now on, Lagarde and co shift to data-dependence when it comes to future policy decisions. Not only in order to assess the inflation outlook, dynamics of underlying inflation …

Sunset Tuesday, March 14, 2023 Daily Market Overview Click here to read the PDF-version of this report. Markets • A sense of calm returned to markets after the extreme risk-off repositioning all day yesterday. The Asian trading session was still marked by wild intraday swings, with short-term US yields at some point up 20 bps before suddenly collapsing 25 bps only to recover again. The 2-y is currently up 36 bps, recouping more than half of the loss incurred on Monday. US February inflation came in at 0.4% m/m for the headline reading and 0.5% in the core measure. The latter was …

Tuesday, 14 March 2023 Please  click here  to read the PDF version Markets •          Yesterday, the sharp ‘post-SVB’ repositioning, especially on interest rates markets, continued unabatedly even as US authorities during the weekend took measures to protect depositors and facilitated more easy refinancing for banks that face negative asset valuations due to the global rise in yields/inversion of the yield curves. However, in a first reaction, it didn’t help to prevent investors from scaling back exposure to the financial sector inside and outside the US. This outflow triggered a further run to safe haven assets. Especially US short term yields …