Derivs - Credit

Emerging market credits were once again feeling the full force of fears that QE tapering could start as soon as next month.

To hedge against central bank dovishness from the Bank of England’s Monetary Policy Committee, JPMorgan suggests entering short sterling curve flatteners.

StormHarbour Securities has hired Magnus Orgard, the former European head of solutions and derivative sales at WestLB, to work in the firm’s client solutions team in London.

Credit Suisse recommends tapping constant maturity swap curve floors on the 30s/7s U.S. rates curve for investors who wish to hedge for significantly higher rates and a flatter long-end curve.

A drop of 15,000 in the number of weekly claims for U.S. unemployment benefits sparked fresh fears on Thursday that U.S. quantitative easing could soon be cut back. U.S. Treasury rates leapt higher and credit spreads widened.

The credit markets have been in their comfort zone in recent weeks, helped by a solid earnings season and improving economic data.

Patrick Law, managing director and head of north Asia rates and fx trading at Barclays in Hong Kong, is joining Bank of America Merrill Lynch.

Some investment firms may cut back on single name credit default swap trading, and even perhaps on holding corporate debt, in response to tighter regulations on clearing and trading derivatives.

The Hong Kong Exchange is planning a round of simulations in the third quarter of this year, to test its newly constructed central counterparty for clearing over-the-counter derivatives, according to a statement in its financial results.

Short term interest rates in sterling could become more stable as a result of the Bank of England’s Monetary Policy Committee adopting a policy of forward rate guidance.

North American investment grade credit spreads are likely to widen moderately in September, as a short-term risk-off mood sets in, BNP Paribas is predicting.

Realized volatility in Europe’s two main credit default swap indices has dropped to its lowest point since May 2011, prompting investors to sell implied volatility with August and, to a lesser extent, September expiries.