In March 2023:
1/Concerns Over Financial Stability, 2/ Volatility Surge and Flight-to-Quality, 3/ DRW ETFExpress Awards.
1/ Concerns Over Financial Stability. Anxiety was nourished by the news from SVB to Credit Suisse acquisition by UBS to the Fed 25bps rate hike to Deutsche Bank slump to the hawkish BOE and ECB.
The CDS on EUR financials deteriorated by 25bps relative to EUR IG. Such a deviation is very infrequent and lays in the long tail of the distribution. The STOXX 600 BANK erased its YTD gains by declining by 11.92% to 158.1617
2/Volatility Surge and Risk-off Mode. Volatility on the bonds, as measured by the MOVE Index, hit a high at 198.71, for the 1st time since 2008, before sliding lower. Non-risky assets were bought. Gold rose by 7.79% to $1969.29 an ounce and buying pressure dragged the US 2Y and 10Y yields 79bps and 45bps lower respectively to 4.025% and 3.468%. On the other hand, the yield decline favored the Technology sector. The US NASDAQ rose by 9.46% to 13,181.35.
3/ DRW ETFExpress Awards. Thanks to the industry support to our growth and development, the ETF Market Making division at DRW received the following awards:
March Performance highlights (USD)
From a regional perspective, US, German and UK equities were bought while International DM and Europe equities were sold. On the fixed income side, strong appetite for US and EU government bonds.