BrokerTec reports 4% MoM rise in EU repo volumes for October
07 November 2024 US, Europe
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CME Group’s BrokerTec market has reported an 11 per cent year-over-year (YoY) increase in average daily volume in the US repo market for October, generating US$317 billion.
This was driven by higher demand for overnight funding as economic uncertainties continued, according to the firm.
BrokerTec noted particular activity in Treasury bonds of varying lengths, including 2-year, 5-year, and 20-year bonds, with a spike in 5-year Treasury repos around the auction on 28 October.
In Europe, trading activity also picked up, with BrokerTec’s EU repo market averaging €300 billion per day, up 4 per cent from September.
The European Central Bank (ECB) cut its interest rate by 25 bps on 17 October, coming into effect six days later.
This rate reduction caused increased trading volume, says BrokerTec, as investors adapted to the ECB’s monetary policy shift.
Erik Norland, chief economist at CME Group noted the broad rise in global bond yields, with US Treasury yields climbing close to 50bps across the board due to “unexpectedly strong” US economic data and worries about future deficits.
“UK yields followed suit, rising about 40bps as the government announced plans for significant new spending paired with tax hikes,” says Norland. “Eurozone bond yields increased by 20 to 25bps, although the European economic data were generally softer than those in the US.”
John Edwards, global head of BrokerTec, summarised the platform’s performance by noting an overall 14 per cent YoY growth in average daily trading volume, reaching US$850 billion across US Treasuries, European bonds, and repo markets.
He adds: “As interest rates and fiscal policies continue to evolve, these high trading volumes reflect the ongoing uncertainty and heightened investor attention on global economic developments.”
This was driven by higher demand for overnight funding as economic uncertainties continued, according to the firm.
BrokerTec noted particular activity in Treasury bonds of varying lengths, including 2-year, 5-year, and 20-year bonds, with a spike in 5-year Treasury repos around the auction on 28 October.
In Europe, trading activity also picked up, with BrokerTec’s EU repo market averaging €300 billion per day, up 4 per cent from September.
The European Central Bank (ECB) cut its interest rate by 25 bps on 17 October, coming into effect six days later.
This rate reduction caused increased trading volume, says BrokerTec, as investors adapted to the ECB’s monetary policy shift.
Erik Norland, chief economist at CME Group noted the broad rise in global bond yields, with US Treasury yields climbing close to 50bps across the board due to “unexpectedly strong” US economic data and worries about future deficits.
“UK yields followed suit, rising about 40bps as the government announced plans for significant new spending paired with tax hikes,” says Norland. “Eurozone bond yields increased by 20 to 25bps, although the European economic data were generally softer than those in the US.”
John Edwards, global head of BrokerTec, summarised the platform’s performance by noting an overall 14 per cent YoY growth in average daily trading volume, reaching US$850 billion across US Treasuries, European bonds, and repo markets.
He adds: “As interest rates and fiscal policies continue to evolve, these high trading volumes reflect the ongoing uncertainty and heightened investor attention on global economic developments.”
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