​Weekly: BoJ Moves To Negative Rates; Funds Eye Hybrids

The Bank of Japan shocked the market today with news it will start charging 0.1% on current account deposits. The Nikkei 225 and the S&P both spiked up on the news. While this should be positive for equity markets, the move has some market pundits skittish, while some analysts are saying central bank machinations just don’t have the same oomph they used to. Also in the U.S., we look at a gigantic Eurodollar trade this week that was likely the result of a risk manager hedging their equity portfolio. The trade was a bet on the U.S. raising rates another three times this year. In Europe, the market rally and sharp volatility retracement during the latter part of last week has seen investors increasingly trading Eurostoxx 50 (SX5E) calls financed by puts or down-and-in puts. As the market shows signs of greater calm and short-term vol moves lower, VSTOXX puts and put spreads are also increasingly offering attractive leverage for investors.