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In November 2023

1/Central Banks Updates, 2/Cross Asset Picture, 3/Israel-Hamas 4 days Truce, 4/DRW Awarded ETF Liquidity Provider of the Year.

1/Central Banks Updates. On one hand, The Fed held rates steady for a second meeting as expected. The recent surge in US Treasury yields contributed to a tightening of financial conditions, leading FOMC to indicate patience over further rate moves. US inflation slowed in October, which gave positive expectation that the Fed is likely to be done raising rate. On the other hand, EU CPI was in line with expectation at 2.9%. The Core measure, excluding volatile items, was also disclosed in line at 4.2%. The ECB may also be almost done with its tightening policy. Finally, the increase of flexibility over the YCC, which was introduced in 2016, dragged the Japan 10Y yield to 0.96% – back to level seen in 2012 – before declining by 28bps to 0.67% by the end of the month. The USDJY crossed above 150 which forced the BOJ to support its currency.

2/Cross-Asset Picture. Risky and non-risky assets rose. On the risky side, the SPX rose by 8.92% to 4567.8 and the price of the protection against default of US HY Corp debt declining by 1.14%. The last time the CDS declined that much was in November 2020. On the non-risky side, the precious metal rose by 2.65% and the US 10Y yield slipped -60bps lower to 4.3264% while it was hovering around 5% at the end of October.

3/Israel-Hamas 4 days War Truce. An accord was brokered to exchange 50 Israeli hostages counting children and women with 150 Palestinian prisoners. In November, the TA 35 rose by 7.73% after incurring a -10.7% loss in October following the attack. Oil declined by -5.24%.

4/DRW Awarded ETF Liquidity Provider of the Year. Thanks to our counterparts and the ETF industry for the recognition of our efforts. Our ETF team deploys a lot of resources to provide competitive prices across asset classes. Our product coverage is expanding to equity emerging single country and fixed income credit.

November Performance highlights (USD)

  • Equity Indices: TPX: +7.85%, MSCI EM: +7.86%, SPX: +8.92%, NASDAQ: +10.67%, SX5E: +11.11%, DAX: +12.73%.

  • Bonds: GER 10Y: -36bps, US 10Y: -60bps, GER 2Y: -20bps, US 2Y: -41bps.

  • Commodities: Gold: +2.65%, Oil: -5.24%,

  • FX: DXY: -2.97%, XBTUSD: +8.95%

From a regional perspective US equities were bought. On the fixed income side, appetite for US, and European bonds.

More specifically:

  • On equity indices: The MSCI USA CLIMATE CHANGE was bought. A mixed activity was recorded on the S&P500, NASDAQ, SX5E, MSCI WORLD SCREENED and MSCI EUROPE. On the other hand, the FTSE100 was sold.

  • On fixed income: Credit: mixed activity on EUR HY and IG. Rates:  US 7-10Y and the 2-10Y US Steepener were in demand while the 20Y+ recorded a mixed activity. The EONIA and the EUR 1-3Y were bought.

Sources: Bloomberg RFQE, Tradeweb, DRW - November 2023