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Alternative Market Briefing

Hedge funds said to have magnified yesterday’s market swings

Thursday, October 16, 2014

Benedicte Gravrand, Opalesque Geneva:

Yesterday saw a steep plunge, followed by a sharp rally in a number of markets. Apparently, hedge funds had a heavy hand in those swings.

By 10pm ET last night (Wednesday, October 15th) – according to a recap in the Wall Street Journal – the Dow Jones Industrial Average had dropped 173 points, or 1.1%, to 16141.8 (after dropping by as much as 2.8%); the S&P 500 had fallen 15 points, or 0.8%, to 1862 (after wiping out its 2014 gains); the Nasdaq Composite had risen 11.85 points, or 0.3%, to 4215; the Russell 2000 had gone up by 12 points, or 1.2%, to 1074. Germany’s DAX index fell 2.9% and France’s CAC 40 dropped 3.6%.

Furthermore, U.S. Treasury yields plunged to their lowest level in 16 months, to under 2%, before recovering; the 10-year yield for T-bills settled at 2.091% (from 2.206% on Tuesday), the 11.6 bps decline being the most on a daily basis since September 2013. Trading volumes exploded, with $924 billion of T-bills changing hands, according to the paper.

October futures contracts for the VIX rose 17% to 24.4; November futures contracts rose 12% to 22.17 and December futures contracts increased 9.6% to 20.98.

CBOE Volatility Index October 15, 2014, 3:14pm Source: ......................

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