Ed Wicks, global head of trading at Legal and General Investment Management (LGIM) discusses how traders should prepare for the week ahead amid the long-awaited Fed and ECB’s rate decisions; the anticipated flood of Treasury issuance; LGIM’s trading strategy in preparation for elevated volatility and the upcoming global indices rebalancing.
- Equities volumes are low and bid-ask spreads are wide for the year. Liquidity in US IG remains good.
- In primary equities: There will be several IPOs in Financials and Mining on NYSE, and Consumer Discretionary on Nasdaq.
- This week’s data: The Fed’s interest rate decision will be announced on Wednesday; the US Inflation Rate is out on Tuesday and the Initial Jobless Claims report is expected on Thursday.
- US axe data, which is within normal ranges, indicates a higher proportion of selling versus buying of credit going into this week.
Europe / UK
- European equities volumes plummeted but bid-asks spreads are tight. Euro IG bid-ask spreads remain tight.
- By Friday, short interest levels in Tech fell by 13.9%, and in Diversified Financials it dropped by 10.3%.
- This week’s data: The ECB’s interest rate decision will be announced on Thursday; the UK Unemployment numbers are out Tuesday and data on the UK’s GDP is expected Wednesday.
- EU axe data, which is within normal ranges, suggests a higher proportion of EU dealer bids versus asks in credit.
- GBP axe data, within normal ranges, suggests much higher net buying versus selling of credit.