Markets Wrap : 12-03-2021

Will Britain close the door for EU customers? OptionMetrics releases a premire historical data product; US markets reach highs despite bond yield gains;

Will Britain close the door for EU customers?

Since Brexit, the UK has lost millions worth of derivatives market to the EU. On December 31st, just hours before the complete departure from EU, FCA announced that regardless of the ability for UK firms to operate in the EU, the EU firms will be given an “equivalency” to continue business in the UK. This equivalency notice ends by 31st March.

Several investment firms and news agencies have stated that while the deadline is soon approaching, they do not expect a ban for the EU firms in the UK as it will not provide an upside to the UK. Since Brexit, UK’s share in euro swap trading has dropped from 40% to 10%.

Incidentally, swaps trading platforms in the US have equivalency with the EU meaning that EU firms can freely participate in the US market. The UK has been waiting for a possible equivalency clause.

Source: https://www.nasdaq.com/articles/britain-set-to-keep-door-open-for-eu-derivatives-customers-2021-03-11

OptionMetrics releases a premire historical data product

The options data and analytics provider OptionMetrics announced that they have launched a new historical data product. Dubbed IvyDB Futures, the new product provides historical data from 2005. The pricing data relates to the most liquid contracts in agriculture, currency, energy, equity, interest rate, and metals. The data will cover contracts traded in CME, ICE as well as NYMEX exchanges.

Source: https://www.businesswire.com/news/home/20210311005674/en/OptionMetrics-Announces-Premier-Historical-U.S.-Futures-Data-for-Research-on-Markets-Risk

US markets reach highs despite bond yield gains

Generally bond yields and stock markets have an inverse relation. Higher the bond yields, lower the gains in the stock market (or even losses). However in last week, US 10 year treasuries reached 1.626% yields, up from 1.597% at the start of the week. 5 year treasuries have also reached 0.842%, up from 0.821% at the start of the week.

At the same time, S&P 500 recorded gains to end the week at 3943.34, up from 3849.20 from the start of the week. NASDAQ 100 ended the week at 12937.29, up from 12577.11. Dow Jones Industrial Average, or the Dow, also recorded 32778.64 up from 3152.15.

Is the US market an anomaly or is this the new norm? We are yet to see.