Euro rates volatility wrong-foots dealers
Banks’ risk appetite and liquidity are low following painful rates vol moves, say traders
Dealers are struggling to navigate an increasingly volatile and gappy euro interest rate derivatives market, with uncertainty over the timetable for rate rises in the eurozone resulting in unexpected market moves that have led to bank losses and reduced risk appetite from market-makers.
“It’s a bit like moving from one crisis into another. I think the markets are now really, really stuck. You also see that liquidity is dropping dramatically because people are a little bit clueless on what the
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