Market experiencing volatility, liquidity strains, spread movements, and rising funding costs

From Investing.com: 2024-12-05 02:26:00

Yesterday, the market saw a slight increase with rising volatility levels as the 10-day realized volatility began to climb. This was driven by a 60 basis point movement in the market, higher than the usual 25 bps. With an important Jobs report on Friday, a Fed meeting next week, and ongoing market volatility, it is expected that volatility will continue to rise. The VIX 1-day also rose somewhat intraday, with the possibility of reaching 20, historically a significant level. Meanwhile, liquidity strains are becoming apparent in the market structure, impacting various indicators such as credit spreads and swap spreads. The market is experiencing unusual spread movements and rising funding costs, potentially leading to market distortions and uncertainties regarding future conditions. The Yen carry trade situation is also a point of concern, particularly if the BOJ decides to adjust rates in December. It is advised to monitor market conditions closely as they evolve.



Read more at Investing.com: Market Liquidity May Not Be Ample as Some Believe