![]() ![]() This dislocation raised fears that the Bank of England would find it harder to prevent UK inflation rising further – and turbo-charged demand for inflation protection products. The pound also took a pasting and the sterling/ US dollar spot rate slumped by roughly 14% in the same timeframe. ![]() On September 23, markets reeled at the announced raft of tax cuts that many thought would presage an increase in UK government debt – a perception that pummelled gilts and within three days provoked a 96-basis point spike in 10-year yields. ![]() Preparation had helped the bank to deliver this service when the sterling markets went into crisis late in Q3.Ĭiti’s ability to manage a largely one-way demand for inflation protection was tested throughout the year, but never more so than in September, when a change in UK premiership brought the particular challenge of then-Chancellor Kwasi Kwarteng’s ill-received mini budget. “The ability to warehouse risk has become an increasingly rare commodity across the Street over the last couple of months, so knowing we can always go to Citi with a decent size ticket is really valuable to us as a client.” “Citi is always open to taking on more risk and warehousing that risk to make sure we can get the trades we need done,” says the head of LDI at a British pension fund. In a year beset by multiple challenges of their own, clients appreciated Citi’s approach. We’ve seen more inflation market activity this year than ever before Pedro Goldbaum, Citi ![]()
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