Despite 300 bps points of rate rises by now, the most aggressive monetary tightening drive in European Central Bank (ECB) history, it still battles persistent inflation in the eurozone. Consequently, we’ve seen a very strong start to the year in our markets, writes Frank Gast, managing director and member of the Management Board at Eurex Repo, in a commentary.
Term-adjusted volumes increased by +40% across all market segments in January, reaching around €250 billion. Our Repo Market continued its strong growth in GC & Special by more than 50%. In Special Repo, the Bund stays in high demand. We have noticed significant trading volumes for term trades around the 1-month mark. Average daily traded volumes grew by 35% year-on-year in the Repo market while average outstanding increased by 42%. Average daily traded volumes in Bund Special Repo increased by 53% compared to January 2022.
In GC Pooling, the average daily traded volume nearly doubled to almost €36 billion daily compared to December. Compared to January last year, GC Pooling more than tripled in average daily traded volumes and nearly doubled in outstanding. This shows that, due to higher interest rates and TLTRO repayments, the demand for bank financing and financing products like GC Pooling increases. We also continue to see an increasing number of clients regularly trading GC Pooling compared to the beginning of last year.
In January, the total traded volume of EU bonds recovered by 27% after the year-end decline in December. The strong recovery was mainly due to a huge increase in trading in single ISINs/special repo (+42%), which more than offset the decline in GC volumes (-87%). Total trading volumes in Supranationals & Agencies almost doubled in January compared to December, reaching the second-highest level after November 2022.