The house is on fire, but the pipes are still working.
The deployment of President Donald Trump’s prices criticized the equity and obligations markets, because the volumes of volatility and negotiations have skyrocketed.
Despite this chaos, the infrastructure authorizing asset managers, sovereign funds, central banks and others to exchange, buy and liquidate the assets was held stable. As an investor said, “everything is a massive stress test”.
Base trade – A bet of coverage funds used by large managers such as Millennium, Citadel and Exoduspoint – has taken advantage of a slight erroneous pricing in the term contracts of the treasury and the treasurers in cash, an almost without risk trade which does not reveal a small profit. The hedge funds have amplified this trade with borrowed money, given the relative lack of danger, making recent movements in the treasury markets a potentially calamitarian and large -scale event.
In March 2020, at the height of the volatility of the market at the start of the pandemic, the federal reserve ended up buying bonds of $ 1 Billion for everything to work. This experience made sure that the regulators and central banks were more close to trade, which has only increased assets from the pandemic.
Now, according to the Treasury Secretary Scott Bessent, hedge funds are currently experiencing “uncomfortable but normal” deleveraging of their positions, and the most important market in the world – the debt of the American government – is solid.
There were concerns that market caliber could cause an archegos crash of a large asset manager who could not answer his margin calls. Michael Wilson, Stanley Equity’s Stratege of Morgan Stanley Equity, wrote in a note that there are indications for the sale of so-called defensive actions, which are supposed to do well in a slowdown in the market and could be a sign of management of managers to meet the requests of the first broker.
But the minutes published on Wednesday of the Bank’s financial policy committee on Wednesday declare that hedge funds have met with margin calls because the prices have been announced “without taking measures that would further amplify market volatility”.
Even the stock market markets have not yet struck the circuit circuit in the trade despite the VIX – the so -called gauge of the fear of Wall Street – being in its highest brand since March 2020.
“We do not know what we do not know, but at least everything has worked so far,” said a veteran as for trader.
businessinsider
