Buy The United States of Europe
Long Europe, short US is the summation for February. German elections did not derail this bullish train but only boosted Eurex trading volumes across the DAX index family compared to the quieter January. Taking the spotlight were big volume increases for the Banks sector, STOXX? Europe 600 and VSTOXX? derivatives, alongside a surge in activity for the EURO STOXX 50? TRFs. At the same time, the EURO STOXX 50? daily options enjoyed a record month. We have heard from several clients how low realized correlation has aided dispersion strategies. Consistent with this are the strong volumes across German, Italian and Spanish equity options; the top five trading names are BASF, Infineon, Siemens Energy, Deutsche Telekom and Mercedez-Benz. Following the success of our iShares Physical Gold options, we now see a pattern of more regular trading in the WisdomTree Brent Crude Oil options. Amidst the ByBit hack and news flow on Ethereum, we observed an uptick in volumes on Futures on Ethereum executed in February. It serves as a reminder of how members value our regulated clearing house environment as the trusted path to crypto trading.
Members can look forward to the addition of 30 new Swiss equity TRFs, expanding our universe of underlyings to address demand from equity finance desks. Further new product launches and important structural measures will be announced for implementation during Q2 in the coming weeks. There has been some fallout from the unexpected inclusion of tax changes to manufactured dividends passed in the French government budget. There is a need to accurately interpret this French law by specifying rules and guidelines. In our role as a central market infrastructure provider, Eurex has already proactively approached its members to discuss the implications. We expect clarity will be forthcoming, restoring some confidence.
This month's commentary concludes amidst a palpable sense of geopolitical realignment. The ‘made-for-TV’ drama that unfolded in the Oval Office appears to have fostered and galvanized greater unity and resolve within Europe, potentially another catalyst for the long Europe, short US trade.