| | | | | | | | January 10, 2025 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Lead Stories | | | A 2025 Outlook, What Options Pricing May be Indicating?
Dennis Davitt, CEO of MDP - Cboe
The November Market Phenomenon: Rallying Stocks and Falling Volatility
Over the last three years, November has emerged as a statistically significant month for U.S. equity markets, particularly the S&P 500. On average, the benchmark index has rallied 6.86% during the month, while the VIX-the market's leading measure of volatility-has collapsed by 30.31%. This recurring pattern stands out not only for its consistency but also for its magnitude relative to other months of the year. While November often carries a sense of renewed optimism in markets, recent years have provided a particularly noteworthy combination of factors, including major elections, risk repricing in the options market, and a shift toward perceived "normalcy."
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Wall Street 'fear gauge' at 3-week high as stocks sink
Saqib Iqbal Ahmed - Reuters
Wall Street's most watched gauge of investor anxiety rose to a three-week high on Friday as stock indexes sold off following a an upbeat jobs report that pushed back market expectations for further Federal Reserve interest rate cuts.
The Cboe Volatility Index (.VIX) - an options-based indicator that reflects demand for protection against drops in the stock market - was last up 1.1 points to 19.18. The index reached 20.31, its highest since Dec. 20, earlier in the session.
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Options market positioned for US Treasury 10-year yield to hit 5% in near term
Gertrude Chavez-Dreyfuss - Reuters
Investors in the futures options market are betting the benchmark U.S. 10-year Treasury yield is headed higher to 5% in the near term, reflecting worries that the incoming Trump administration's policies will increase an already bloated fiscal deficit and revive inflation.
Traders are watching that key 5% level in the 10-year note, which, if hit, could be bad news for U.S. stocks, much like it was in October 2023 when the 10-year yield climbed to 5.02%. That coincided with the benchmark S&P 500 index dropping to a five-month low.
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ANALYSIS: Cboe looks to new products after volatile year
Radi Khasawneh - FOW
Cboe Global Markets plans to use its product development capabilities to stay ahead of the game as the options exchange reflects on its fifth consecutive record year for trading activity.
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Wall Street Sees Risks for Stocks in the Jobs Report
Denitsa Tsekova and Phil Serafino - Bloomberg
All-important US jobs day
How important are rate cuts to the bull case on equities? It's a pressing question for investors in risky assets, who've lately struggled to ignore the bond market's agitated reaction to inflation risk.
Key evidence comes in the form of the December US employment report. Economists predict that non-farm payrolls increased by 165,000, based on the median forecast, with the unemployment rate steady at 4.2%. Bloomberg Economics puts the number of new jobs a lot higher -- at 268,000 -- while Nomura Securities cites indicators including hiring surveys and jobless claims in pegging it at 180,000.
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BlackRock filing for hedge fund strategy ETF underlines new tilt; Move demonstrates manager's new determination to democratise alternatives and could be timely, analysts say
Steve Johnson - Financial Times
BlackRock's ambitions to extend its dominance into the world of alternative assets have become crystal clear in the past year. It has now unveiled its latest foray - bringing a hedge fund strategy to its exchange traded fund investors.
The world's largest asset manager has snapped up Global Infrastructure Partners, the planet's second-largest manager of private infrastructure assets; Preqin, a major private markets data group; and HPS Investment Partners, a private credit manager, as well as sealing a deal with Switzerland's Partners Group to create model portfolios containing private equity, private credit and real estate funds.
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Cryptoverse: Next wave of US crypto ETFs already in the pipeline
Suzanne McGee - Reuters
What a difference a year makes. Rewind the clock to early January 2024, and the asset-management industry was anxiously watching to see if the much-anticipated debut of U.S. spot bitcoin exchange-traded funds could live up to expectations they would pull in as much as $30 billion in their first year. Today, those issuers are cracking open the champagne. That first wave of bitcoin ETFs attracted a whopping $65 billion in 2024, helping to propel the price of bitcoin from $43,000 to more than $100,000. The largest of those new products, BlackRock's iShares Bitcoin Trust has become the most successful debut in the ETF industry's 35-year history.
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Chinese Traders' Demand for Global Stocks Prompt Rare ETF Halts; Two China ETFs tracking overseas shares suspended from trading; The ETFs' premiums spiked as traders seek returns abroad
Bloomberg News
Chinese investors' fierce appetite for overseas shares has triggered rare, full-day suspensions on a pair of exchange-traded funds tracking global equities. The Invesco Great Wall S and P Consumer Select ETF QDII and Harvest Der Dax ETF QDII have been suspended from trading until further notice after their premiums soared, according to exchange filings issued after market hours on Thursday. This marks an escalated degree of risk warning to investors, as halts on such funds usually last for an hour.
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| | | | | | Exchanges | | | Optiver, XTX Markets among consortium to back launch of Brazilian derivatives exchange A5X; The exchange is set to go live in 2026 with investment from five firms set to fund talent and technology to facilitate launch.
Claudia Preece - The Trade News
Optiver, IMC Trading, Jump Trading Group, XTX Markets and ABN AMRO Clearing Bank have invested in A5X, a new Brazilian derivatives exchange which is set to begin operations by 2026. The Series B strategic investment follows a previous funding round and will specifically fund the investment in talent and technology necessary for A5X's launch. The five latest investors, as well as contributing capital, are set to share their joint knowledge in the creation and evolution of other stock exchanges globally also, said IMC in a social media announcement. The total capital raised so far stands at an estimated R$200 million following both Series A and B rounds.
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Euronext announces volumes for December 2024
Euronext
Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris - 9 January 2025- Euronext, the leading European capital market infrastructure, today announced trading volumes for December 2024.
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HKEX Announces Senior Appointments
HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce today (Friday) the appointments of Gregory Yu as Managing Director, Head of Markets, and Kevin Rumjahn as Managing Director, Head of Strategic Projects. In his new role, Mr Yu will help drive the continued vibrancy of HKEX's equities, derivatives, and fixed-income and currencies franchises, and oversee the development of the Markets function, further elevating Hong Kong's leading position as an international capital market. Mr Yu will join HKEX in March after over 18 years at JP Morgan, and will report to HKEX Chief Executive Officer, Bonnie Y Chan. He will also become a member of the Group's Management Committee.
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TAIFEX Trading Volume Reaches All-Time High in 2024
TAIFEX
Taiwan Futures Exchange (TAIFEX) concluded 2024 with a record-breaking total volume of 395,471,441 contracts, surpassing its previous high set in 2021. The average daily volume (ADV) climbed to 1,634,180 contracts, representing a 20.3% increase from 1,358,347 contracts in 2023. Notably, foreign institutional participation in Taiwan's futures market also reached an all-time high, accounting for 33.5% of total trading volume in 2024, up from 29.4% in 2023.
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Nickel Sulphate Futures Now Live for Trading on Abaxx Exchange
Abaxx
Abaxx Technologies Inc. (CBOE:ABXX)(OTCQX:ABXXF) ("Abaxx" or the "Company"), a financial software and market infrastructure company, indirect majority shareholder of Abaxx Singapore Pte Ltd. ("Abaxx Singapore"), the owner of Abaxx Commodity Exchange and Clearinghouse (individually, "Abaxx Exchange" and "Abaxx Clearing"), and producer of the SmarterMarkets Podcast, today announced that Nickel Sulphate futures, the first of its battery metals products, are now live for trading.
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Beyond Borders: Starting 2025 Strong
Dave Howson, Global President - Cboe
2024 was a strong year at Cboe as we continued to innovate, enhance market accessibility and deliver trusted solutions to meet the needs of an ever-evolving market. Access to global markets was a key focus in 2024. Our markets are more connected than ever and gaining deeper insight into different markets is a priority for investors everywhere. As I wrote about in October, the U.S. markets are especially of interest to investors around the world. We made strides in growing our import business-helping foreign investors access U.S. markets-last year with new products, like options on VIX futures, and expanding accessibility of our market data products over various channels including Cboe Global Cloud and Cboe DataShop, with more to come in 2025.
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| | | | | | Regulation & Enforcement | | | Two Sigma Founders Head to Arbitration After Years-Long Feud; Compliance chief Otto, Co-General Counsel Shih have left firm; Founders Overdeck and Siegel stepped down as co-CEOs last year
Hema Parmar - Bloomberg
Two Sigma Investments' billionaire founders, John Overdeck and David Siegel, are heading to arbitration after a longstanding feud over the direction of the quant hedge fund. Two Sigma, which manages more than $60 billion, disclosed the arbitration and a pair of executive departures in a letter to investors Wednesday. The firm said in the letter that it isn't a party to the dispute and doesn't intend to share regular updates about it with clients, according to people familiar with the matter. "While the arbitration between the firm's founders runs its course, the management team remains focused on serving our investors and strengthening Two Sigma for the long term," a spokesperson for New York-based Two Sigma said in a statement.
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| | | | | | Strategy | | | Options Pricing Suggests Rupee is Likely to Weaken Further; Volatility has risen since Malhotra took over as RBI chief; Traders are buying call spreads, digitals to express view
Subhadip Sircar - Bloomberg
The rupee is set to extend its slide from record lows in the near term, with the options market signaling a significant chance of the currency weakening to 87 per dollar by the end of March.
There's a nearly 60% likelihood of the rupee falling to this level, compared with just an 9% chance of it recovering to 84 during the same three-month period, according to market estimates based on quoted implied volatility as of late Thursday, collated by Bloomberg.
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Wall Street gets off to a bumpy start to 2025. How investors can prepare for more volatility ahead.
Isabel Wang - MarketWatch
Wall Street was not ready for such a rough start to 2025.
A sharp selloff in the world's largest bond market sent shockwaves through the U.S. financial markets this week, leaving investors to ponder if that choppiness will persist throughout the new year.
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Regime Shift in Equity Vol? Downside Risks Re-Emerge
Mandy Xu - Cboe
WHAT STANDS OUT:
Implied volatilities jumped across the board following last month's hawkish FOMC meeting but they have since diverged quite markedly. While equity, credit, and commodity vols have all normalized meaningfully from their Dec 18th highs, interest rate and FX implied vols have continued to climb higher on the back of rising monetary and fiscal uncertainty. VIXTLT Index, for example, is up almost 20pts to the 88th percentile high.
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Index Insights: December 2024
Cboe
Broad-based equity indices turned low in December 2024, with the S&P 500 Index (SPX) decreasing 2.5% and the Russell 2000 Index (RUT) dropping nearly 8.4% from year-to-date highs. Despite the pullback, the S&P 500 ended the year up 23.31% and the Russell 2000 gained 10%, marking the second consecutive year of double-digit returns for investors. Sentiment shifted toward a more defensive posture, with rising correlations and higher implied volatility into year-end. The Cboe Volatility Index (VIX Index) closed at 17.35, its second-highest monthly close of the year. Indices focused on premium selling outperformed in December, with the S&P 500 Put-Writeà Index (PUT) finishing nearly flat and the Russell 2000 Put-Write Index (PUTR) down 3.4%.
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| | | Jeff Bergstrom
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