By Tommy Wilkes and Tom Finn LONDON (Reuters) – Currency markets are so listless, the head of European foreign exchange sales at Nomura has taken to selling bonds instead. Pitching currency opportunities to clients is pointless without the big exchange rate swings that pique investor interest, Fabrizio Russo told Reuters. “There’s no point. When markets are quiet there’s really no point in calling (clients).” “I’ve been selling them bonds,” he added, contrasting the slow pace with the frenzied buying of European government bonds in recent weeks. Russo’s experience is echoed in dealing rooms across London, the main trading centre for the $5.1 trillion-a-day FX market. Some trading veterans said it reminded them of conditions before the 2008 global financial crisis erupted. Deutsche Bank’s Currency Volatility Index has declined since 2017 to its lowest in 4-1/2 years and currently stands at about two-thirds its levels of early … [Read more...] about Slumbering FX confounds traders, prompts fear of rude awakening
How bets against volatility fed the stock market rout
By Bloomberg Tues., Jan. 15, 2019 Central banks enter the new year under pressure from investors to rethink just how aggressive they can be hiking interest rates. A slowdown in the world economy, the trade war and skittish financial markets are forcing policy-makers including Federal Reserve Chairman Jerome Powell to express fresh caution about their scope for tightening monetary policy. The People’s Bank of China is also pledging support for its economy. That outlook marks a change from last year where a majority of central banks raised rates and the European Central Bank ceased buying assets. Of course, if economies weather the latest challenges, policy-makers may need to rethink anew. What Our Economists Say: “Heightened uncertainty about the trajectory for policy normalization and reduced divergence between the Fed and the rest are set to characterize the 2019 central bank outlook.” — Tom Orlik Here is Bloomberg Economics’ quarterly … [Read more...] about When it comes to rates, what are central banks going to do next?