The invasion of Ukraine continues to drive uncertainty in the global economy. The implications from the conflict are feeding through into markets, with equities retreating and bond yields rising across key jurisdictions. The conflict puts further pressure on mounting inflation figures with increased disruptions to already stressed supply chains, with commodity and food prices soaring, reaching all-time highs for some essential products. Against this backdrop, pressure is growing for major central banks to reevaluate policy and to help curb rising inflation. While following different trajectories, multiple rate hikes are now priced in before end of 2022 in both the UK and the Eurozone.
The fixed income franchise enjoyed momentum enthused by the hawkish tilt in central bank rhetoric and signals for a rapid turn for rates cycles in Europe and the UK. Euribor, in particular, enjoyed tail winds, with average daily volume (ADV) over the period in futures of 982,000, +37% YoY and 362,000 for options, twice the level from a year ago. Open interest (OI) in the complex is trending upwards, +12% and +72% compared to a year ago in futures and options respectively.
Effective April 18, 2022, a change was introduced to the pricing methodology for Euribor packs and bundles. The Euribor strategies are now aligned with the methodology applied in SONIA packs and bundles. More detail here.
Fixed Income finished April with ADV of 1.8 million contracts, +25% YoY. OI in the complex was 22.7 million contracts, +8% YoY.