Monthly Securities Finance Market Review: October 2024

October saw an uptick in volatility across the equity and fixed income markets. Job market strength and persistent core inflation, coupled with elevated political uncertainty in the run-up to the U.S. election, resulted in a drop in global indices for the month, while fixed income was also under pressure as yields rose. Securities lending markets saw heightened activity in this climate as EquiLend’s NGT platform experienced a month of record volumes with 3,012,890 trades executed versus $3.03 trillion (+10% month over month and +12% year over year).

U.S. Federal Reserve rate policy continues to be a driver with relatively strong labor market statistics and core inflation remaining >3%, reducing the odds for future 50 bps rate cuts. U.S. treasury yields were up, as were European sovereign yields, as economic momentum slowed and the ECB cut rates by 25 bps. Global fixed income activity on NGT was up 24% from October 2023 as demand remains strong, with sovereigns and credit issues posting negative returns.

Global equity indices pulled back on mixed corporate earnings reports combined with the political climate and despite relatively strong economic figures. Volatility increased as the month progressed and drove month-over-month gains in securities lending trading activity in the U.S., Canada, EMEA and APAC regions. Canada was up 21% as a number of names went ex-div.

Looking forward, markets will need to digest the results of the U.S. election as well as the output from the subsequent Fed meeting this week.