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We have an exclusive report today on Citadel Securities which is planning to start market-making in eurozone sovereign bonds next year in a challenge to investment banks’ dominance of the €10tn market.
Citadel Securities, founded by billionaire Ken Griffin in 2002, has commanding positions in US stocks, Treasuries and swaps trading. It has been at the vanguard of a group of ultrafast firms that have stepped into sovereign debt markets as tougher rules on leverage force banks to curb market-making.
The decision to move into the European sovereign bond market follows a surge in trading volumes on the continent as interest rates rise. Average daily trading volumes in European sovereign bonds in the second quarter of this year hit their highest quarterly level since 2014, according to trade association AFME.
“We have built a leading global franchise in US rates products, and euro rates is a logical next step,” Peng Zhao, chief executive of Citadel Securities, told the Financial Times on the sidelines of an investment conference in Hong Kong this week.
“Client feedback has been overwhelmingly positive and we expect to enter the market next year,” he added. Hudson Lockett has the full story.
Here’s what else I’m keeping tabs on today:
US-China relations: US Treasury Secretary Janet Yellen holds a second day of talks in San Francisco with her Chinese counterpart He Lifeng. The talks are a prelude to an expected in-person summit next week between presidents Joe Biden and Xi Jinping.
Economic data: The University of Michigan will release the preliminary reading of its consumer sentiment index for November.
Regulation: Federal Trade Commission chair Lina Khan will participate in a fireside chat at the Federalist Society’s national lawyers’ convention in Washington.
Monetary policy: Martin Wolf interviews the president of the European Central Bank, Christine Lagarde, at the third and final day of the FT Global Boardroom event.
How well did you keep up with the news this week? Take our quiz.
Five more top stories
1. Exclusive: Silicon Valley-based Nvidia has developed three new chips tailored for China that aim to meet the region’s growing demand for artificial intelligence technology while complying with US export controls, according to leaked documents seen by the Financial Times and four people familiar with the situation. The launch comes just weeks after the US restricted the sales of high-performance chips to China that can be used in AI systems.
2. The Industrial and Commercial Bank of China is trying to minimise losses from yesterday’s ransomware attack which disrupted the US Treasuries market, the Chinese foreign ministry said today. New York-based ICBC Financial Services has in recent years become a key player on Wall Street for Treasury clearance as Chinese lenders have expanded overseas. Here’s the latest from Cheng Leng in Hong Kong.
3. The UK economy stagnated in the three months to September, according to official figures released today. Zero growth in the latest quarter was down from a 0.2 per cent expansion in the three months to June, suggesting that higher borrowing costs and the cost of living crisis are having an impact on household incomes. The figures leave the UK towards the bottom of the league table of major economies relative to pre-pandemic levels.
4. Jay Powell has warned the US central bank against the risk of being “misled” by good data on prices, saying the mission to return inflation to its 2 per cent target had a “long way to go”. Speaking at an IMF event yesterday, the Federal Reserve chair said officials were “gratified” by the retreat in price pressures but would not hesitate to tighten policy further if appropriate.
Sign up to receive our new central banks newsletter: Every week former FT economics editor Chris Giles covers the issue policymakers worry about. Sign up here if you’re a premium subscriber or upgrade your subscription.
5. Joe Manchin’s decision to step aside next year and not seek re-election to the Senate sent shockwaves through the Democratic party. Manchin left the door open to remaining in politics and to “fight for the middle”, comments that are likely to raise concern among some Democrats worried the West Virginia senator could mount a third-party bid for president. Here’s more on what Manchin described as “one of the toughest decisions of my life”.
News in-depth
JPMorgan Chase once boasted that Jamie Dimon had “not sold a single share” of the bank’s common stock, reflecting the “blood oath” of his mentor Sandy Weill, who dominated Wall Street and forbade his management team from selling shares until they left. But next year, Dimon will break his holding streak when he starts unloading $1.2bn of stock, topping a table of incumbent US bank executives who have cashed in some of their holdings.
We’re also reading . . .
Chart of the day
There is a false sense of security that automation is something that happens to other people’s jobs, never our own, writes the FT’s chief data reporter John Burn-Murdoch. But a recent study shows that fears over artificial intelligence taking white-collar jobs are already a reality for some.
Take a break from the news
HTSI today launches its 2023 holiday gift guide, with inspiration from the worlds of fashion and food to gadgets and the great outdoors. But start with HTSI editor Jo Ellison’s personal picks for Christmas.
Additional contributions from Tee Zhuo and Benjamin Wilhelm
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Source: Economy - ft.com
