IS Risk Analytics' View From the Desk - January 2020

2020 is off to a strong start as volumes and profits rebounded from a pedestrian month of December.

Early month profits were driven primarily by Gold, and the month finished strong on late month movements in the Euro. Indices also produced profits throughout the month as reactions to the spread of the coronavirus added volatility to equity markets.

Source: IS Risk Analytics Database. Past Performance is not necessarily indicative of future results

*Average Daily Volume represents the daily volume from ISRA customers for each day of the month divided by the average daily volume for the month. Each day is represented as a percent of the average.

Source: IS Risk Analytics Database. Past Performance is not necessarily indicative of future results

** Average Daily B Book PnL represents the daily B Book PnL from ISRA customers for each day of the month divided by the average daily B Book PnL for the month. Each day is represented as a percent of the average.

ASIA

Following over a year of difficult negotiations, the US and China signed a “phase one” trade deal designed to reduce trade tensions between the two countries. Under the deal, China agreed to increase purchases of US products over a two-year period, and the United States will reduce some of the tariffs it had implemented. China is already seeking flexibility on some of its pledges as the country is currently focused on containing the coronavirus health crisis.

EUROPE

The UK formally left the EU on January 31 and entered into a transition period that is scheduled to end on December 31, 2020. During the transition, the UK will effectively remain in the EU single market but will no longer be a part of European political institutions. The two parties are expected to begin formal negotiations on the new agreement next month.

AMERICAS

The US Senate overwhelmingly approved the US Mexico Canada trade agreement in mid-January and President Donald Trump signed it into law shortly thereafter. Canada is now the only country that needs to ratify the agreement. Prime Minister Justin Trudeau is urging legislators to quickly approve the deal, but the main opposition party has indicated it wants time to study what it considers potentially worrying aspects of the agreement.