When Euromoney sat down with the head of securities at a large US firm in February, the conversation quickly turned to the market volatility at the end of last year.
“December shocked me,” he confided. “There is yet to be a severe price paid or day of reckoning for the extraordinary amount of central bank money that has been put into the system.”
And quantitative tightening has again been postponed. “How do you wean markets off this liquidity? The investor psyche is that any time we get to a place where we feel like volatility is picking up, the market has a gyration and is given a sedative,” he observes, with some exasperation.
Investment banking businesses are showing the strain, at least in fixed income, currencies and commodities (FICC).
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