Market Trends: A Closer Look at the Delivered Pension Market
As the debate on interest rates continues to rage on, we're trying to detect possible signs from monetary market professionals. This efficient market, dominated by professionals, helps us understand the real trends, beyond purely theoretical discussions.
Let's take another look at the delivered pension market. As a reminder, this contract allows any legal entity or UCITS to transfer securities and/or commercial papers to another legal entity or UCITS. The particularity of this contract lies in the irrevocable commitment of the transferor to repurchase the underlying assets and the transferee to return them at a predetermined price and date. This is essentially a lending operation for the transferee and a borrowing operation for the transferor, with an interest rate freely set between the two parties.
Until yesterday, the figures showed that the weighted average rate had decreased for all maturities without exception: -58 basis points for 1-7 day maturities to 8.35%, -12 basis points for 8-90 day maturities to 8.86%, and -31 basis points for maturities beyond 90 days. However, the lowest rates have seen an increase, while the highest rates have decreased. In other words, there is an improvement in market liquidity, but risks remain high.
This trend is a good omen for interest rates in general. This easing is a testament to reduced pressure on the market, which could gradually translate into a downward movement, paving the way for a decline in the TMM (Money Market Rate) and, consequently, the benchmark rate.
