Eurex: Geopolitical risks continue to drive European FIC markets
20 June 2018 London
Image: Shutterstock
In May, geopolitical risks such as the uncertainty arising from the Italian elections continued to drive European fixed income markets, according to Lee Bartholomew, head of fixed income and foreign exchange product research and development at Eurex.
Bartholomew also commented that short covering in Bund Futures helped to drive futures volumes in German benchmark derivatives products.
The spread between Bunds and BTPs was a focal point for fixed income traders and widened to levels not seen for five years, with a spread at 232 basis points (bps).
Bartholomew made the comments after Eurex Exchange's released its Fixed Income Highlights for June.
Eurex found that options volumes saw a strong pick-up, which was, according to Bartholomew, “partly driven by the Italian turmoil and partly by short covering as Bund Futures rallied hard and the market sought protection to the upside.”
He added: “Implied volatility on ten-year Bunds rose from 3.85 percent to 5.5 percent, the top end of the 4 to 6 percent corridor that we have seen for much of the past 24 months.”
Eurex reported in the Italian BTP segment, Eurex had record volumes both in terms of open interest and traded volumes.
Of this Bartholomew stated: “I would like to thank our members for the support they showed in the volatile markets. It was thanks to their support that Eurex was able to offer end-clients access to liquid markets.”
“Options on the French and Italian ten-year futures and options saw record volumes which were underpinned by our committed market makers who provided the liquidity.”
He concluded: “Looking ahead to the summer, it looks like the geopolitical risks and potential trade wars will continue to give markets enough food for thought, which should help to foster volumes on the Eurex trading platforms.
Bartholomew also commented that short covering in Bund Futures helped to drive futures volumes in German benchmark derivatives products.
The spread between Bunds and BTPs was a focal point for fixed income traders and widened to levels not seen for five years, with a spread at 232 basis points (bps).
Bartholomew made the comments after Eurex Exchange's released its Fixed Income Highlights for June.
Eurex found that options volumes saw a strong pick-up, which was, according to Bartholomew, “partly driven by the Italian turmoil and partly by short covering as Bund Futures rallied hard and the market sought protection to the upside.”
He added: “Implied volatility on ten-year Bunds rose from 3.85 percent to 5.5 percent, the top end of the 4 to 6 percent corridor that we have seen for much of the past 24 months.”
Eurex reported in the Italian BTP segment, Eurex had record volumes both in terms of open interest and traded volumes.
Of this Bartholomew stated: “I would like to thank our members for the support they showed in the volatile markets. It was thanks to their support that Eurex was able to offer end-clients access to liquid markets.”
“Options on the French and Italian ten-year futures and options saw record volumes which were underpinned by our committed market makers who provided the liquidity.”
He concluded: “Looking ahead to the summer, it looks like the geopolitical risks and potential trade wars will continue to give markets enough food for thought, which should help to foster volumes on the Eurex trading platforms.
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