Trading volumes dipped slightly from April to May but revenues were hit harder as overall profits came in well below 2021 averages. Earnings were frontloaded in the first week of the month with much of the remainder of the month producing relatively flat results. There was a small burst of profits at the end of the period primarily as a result of the rally in US Indices. As was the case in April, toxic flow in oil and natural gas products was an issue for brokers lacking proper risk surveillance and resources.
*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.
** 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.
Source: IS Risk Analytics Database. Past Performance is not necessarily indicative of future results
The Chinese economy is beginning to rebound as strict Covid lockdown policies have started to loosen. In an attempt to combat the lingering effects of the pandemic restrictions, China’s cabinet announced an expansive set of 33 measures it will implement covering fiscal, financial, investment, and industrial policies. Its goal is to boost the economy such that the country can reach its grown target of 5.5% for the year.
With the Russia Ukraine war still causing economic disruption and stressing energy supplies, the European Union drastically reduced its forecast for GDP growth in 2022 from 4% to 2.7%. Rising energy prices also caused the Commission to increase its inflation forecast for the year to 6.8%, well above the prior estimate of 3.9%. As a result, the ECB has confirmed its intention to raise interest rates during the bank’s July meeting.
Treasury Secretary Janet Yellen acknowledged that inflation has reached “unacceptable” levels in the United States and warned that she expects inflation to remain high through the end of 2022. The likely response from the Federal Reserve will be to increase interest rates at a more rapid pace than expected. Forecasters initially thought rates would reach 2% by early 2023 but have since revised to a 3% projection.