EURGBP TECHS: Retracement Mode

• Not seen any standout flows to explain that sudden 14 points drop in the Emini on the cash open.
• There was no notable program orders, and the only order that was seen going through was a 1k seller in NQH5 (Nasdaq).

• Q: (1) How do you interpret the pressure seen in the Italian repo market at the end of last year? Do you think there is something physiological there that the ECB should be taking into account?
  A: (1) The banks are adjusting well to the new framework. We are moving away from a situation of scarce collateral. We see that the transmission is not provoking any fragmentation. Our overall assessment is that the money market conditions have not changed too much.

• Q: (2) Are we risking over estimating the impact of QT on the credit channel, given a lot of the activity is skewed towards the front-end of the yield curve (e.g. mortgages)?
  A: (2) Even though we have been reducing interest rates in a robust way since June, we still see that the cost of borrowing for outstanding lows is still high, so it still takes time for the marginal to transmit to the economy. The fact it is taking so much time for the policy rate to transmit to borrowing, makes me think there is some role being played by QT.

Equity Option Expiry Friday 21st Feb, in Notional terms (updated), they have increased versus Friday besides the CAC:

US:

• SPX: $1.29T vs $1.23T.
• NDX: $52.16bn vs $50.06bn.
• Amazon: $13.20bn vs $12.61bn.
• Apple: $16.43bn vs $ 15.53bn.

EU:

• SX5E: €111.08bn vs €102.94bn.
• SX7E: €5.40bn vs €5.23bn.
• DAX: €31.85bn vs €19.36bn.
• CAC: €2.15bn vs €2.16bn.
• FTSE: £11.79bn vs £10.95bn.