Frank Gast, managing director and member of the Management Board at Eurex Repo, commented on market performance in May, which saw a continuation of the positive trend in increasing term and average traded volumes for GC Pooling.
“In anticipation of one of the most pivotal meetings of the European Central Bank, where policymakers are set to pave the way for its first rate increase since 2011, we have seen an increase of more than 40% YoY of term-adjusted volume,” he wrote.
“The common currency has come under pressure due to concerns over Euro-area growth and a resurgent dollar as the Federal Reserve embarks on a rapid rate-hiking cycle. With this in mind, we have seen 12M GC Pooling trades around flat at the beginning of the month and up to +22bp towards the end of May.”
“In our Repo Market (Special & GC Repo), we have seen an increase in average traded volumes of about 64% YoY compared to the same period last year (Jan-May). This has been particularly driven by increased trading activities in Bunds by 80%. Meanwhile, in the SSA segment, the 37% increase in Special Repo was a key driver in EU bond trading volumes remaining high in May with a small increase of 6% YoY.
While we noticed lower volumes in GC trading activities for May, this was likely due to the high number of longer dated GC trades in the previous month. Compared to last year, we recorded a strong increase in term-adjusted volume (80%) for GC in Jan-May 2022, primarily driven by increased trading activity in Spanish GC Baskets.”
Read our interview with Frank Gast and Frank Odendall, head of Securities Financing Product and Business Development at Eurex, about market trends.