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October 2023 Flow Report

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In October 2023:

1/Israel Under Attack, 2/Central Banks Updates and 3/Bitcoin topped $35,000

1/Israel Under Attack. Terrorist attacks against Israel hit the country. President Joe Biden, Prime Ministers Olaf Scholz and Rishi Sunak travelled to Israel to express their support and help finding ways to deescalate the tensions. President Macron called for an international coalition to fight Hamas as well as strengthening efforts to avert a wider war. On a monthly basis, the Tel-Aviv 35 declined by -10.72%, the most since March 2020 and the Shekel declined by -5.64% against the dollar. Tensions in the area have increased oil volatility. Investors looked to gold to hedge against geopolitical risk. Since the start of the conflict, the precious metal rose by 8.9% to $1996. On the other hand, US Treasuries did not play a safe-haven role: sellers of the US10Y dragged its yield 9bps higher to 4.89%.

2/Central Banks Updates. ECB left its rates unchanged. The US economy grew at 4.9% last quarter, the fastest pace since 2021, supported by strong consumer spending. The Core PCE QoQ rose to the slowest pace since 2020 at 2.4%. The repricing of the yield curve supports the higher for longer policy. As a result, the Fed was expected to keep its rate unchanged.

3/Bitcoin Topped $35,000. Possible approval in the coming weeks of the first US spot Bitcoin ETFs dragged its price 28% higher in October to level lastly seen in May 2022.

October Performance highlights (USD)

  • Equity Indices: TPX: -4.48%, MSCI EM: -3.94%, MSCI BRAZIL: -3.79%, DAX: -3.72%, SX5E: -2.70%, SPX: -2.20%, NASDAQ: -2.08%

  • Bonds: GER 10Y: -3bps, US 10Y: +36bps, GER 2Y: -19bps, US 2Y: +4bps,

  • Commodities: Gold: +7.32%, Oil: -10.76%,

  • FX: DXY: +.46%, XBTUSD: +28%

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

More specifically:

  • On equity indices: The MSCI USA CLIMATE CHANGE, S&P, NASDAQ, DAX, SMI, MSCI BRAZIL and MSCI EMERING SRI were in demand. A mixed activity was recorded on the SX5E and the MSCI WORLD. On the other hand, MSCI EM was sold.
  • On fixed income: The US 1-3Y, 3-7Y, 20Y+ and Govt Inflation-Linked All Maturities were bought. The EONIA was bought while the EuroAgg Treasury recorded a mixed activity.
Sources: Bloomberg RFQE, Tradeweb, DRW - October 2023