MOVE-ing Against Decay
For all the talk of fiscal risk, Eurozone instability and the perils of policy normalisation, it has been an awfully quiet summer. The FX market is bereft of catalysts at present; even that last bastion of volatility – positioning adjustment (especially violent ones) – has fallen in the wake of last week’s price action. Rather than repeat 2011-2012 and squander a fortune on premium, many investors are staying away. In contrast, the opposite is happening in fixed income: UK rate markets have boisterously challenged the market intent of BoE’s forward guidance, while US rates volatility, measured by the MOVE index, is near 3-year highs.
Read the full report: UBS