Page 9 - ISLA_SL_Market_Report_H1_2024_-_Final
P. 9

8   Securities Lending Market Report | H1 2024                                                               9





















                                             Fixed Income






                                             >>>     Introduction


                                             The first half of 2024 has been gripped by uncertainty. Geo-Political risk remains a
                                             constant thorn in the side of markets and continues to loom large. Electoral results
                                             in India and France have bought unanticipated outcomes that contribute towards
                                             volatility. November sees the US head to the polls, and there remains potential
 Securities Lending                          for adverse spillovers to global markets if the Middle East conflict and the war in
                                             Ukraine intensify or further stresses emerge in the South China sea or elsewhere.
                                             Volatility is increasingly becoming a feature of markets again (the first Wednesday
                                             in August saw the VIX ‘fear index‘ of stock volatility jump to its third highest ever
                                             peak). That said mid-year market swings are likely more rooted in speculative churn,
 Biannual Market Review                      and natural price correction cycles than economic fragility as major developed
                                             markets have demonstrated good resilience through 2024, largely driven by healthy
                                             consumer spending and supported by strong employment numbers coupled with
                                             real earnings growth. The growth outlook for emerging market economies again
                                             has broadly looked promising, itself supported by developed markets that benefit
                                             export-oriented economies. China‘s path remains uncertain with industrial activity
 H1 2024                                     and trade bolstering the economy in a positive direction, weighed against a negative
                                             drag from domestic consumption and a faltering housing sector.
                                             Repo market conditions continue to be broadly favourable and competitive, with
                                             liquidity remaining sufficient. However post-trade inefficiencies in particular in
                                             Europe, translate to a somewhat segmented market where not all players have access
                                             to all channels. The result being fragmentation and a premium to be paid (particularly
                                             in times of market stress) for some participants. We would note an increasing role of
                                             hedge funds in the market, especially in the government bond space both in primary
                                             market auctions and secondary market trading.







                                             Fixed Income
                                             James Cherry
                                             Head of Collateral, Lending & Liquidity Solutions, Business Development
                                             Alex Roques
                                             Head of Securities Lending Trading & Distribution
   4   5   6   7   8   9   10   11   12   13   14