Glossary

Concise market terms grouped by category.

Commodities

Basis risk: Risk that the spread between a hedged asset and its hedge moves unexpectedly.
Example: Producers faced basis risk when local crude discounts widened versus benchmarks.
Calendar spread: Price difference between futures of the same commodity with different maturities.
Example: Traders watched the WTI calendar spread to gauge how tight prompt barrels were.
Contango: Futures prices above spot, often reflecting storage and financing costs.
Example: A deep contango in crude signaled ample supply and weak near-term demand.
Real Assets: Physical or commodity-linked assets that hedge inflation risk.
Example: Real assets like energy and infrastructure drew inflows during the rotation.

Credit

AT1 wipeout: Subordinated bondholders taking zero in the deal structure.
Example: The AT1 wipeout rattled the broader bank capital stack.
Capital-spread repricing: AT1 markets widening as hierarchy fears grow.
Example: AT1 desks saw capital-spread repricing within hours of the deal.
CDS: Credit default swap; insurance-like contract against default.
Example: CDS levels spiked as investors hedged bank exposure.
Fallen angel: Bond downgraded from investment grade to high yield.
Example: A wave of fallen angels pressured IG ETFs with forced selling.
Prime broker risk controls: Scrutiny of margin and concentration limits.
Example: Prime broker risk controls tightened across desks after the blow-up.
Regional contagion risk: Stress spreading to peer bank stocks.
Example: Regional contagion risk spread to peer bank stocks.
Shotgun bank merger: UBS absorbing Credit Suisse under regulator pressure.
Example: Regulators choreographed a shotgun bank merger over one weekend.
Sovereign downgrade to AA+: Fitch citing debt standoffs and rising burdens.
Example: The sovereign downgrade to AA+ revived questions about fiscal anchors.
Spread widening: Credit yields rise relative to Treasuries, indicating higher perceived risk.
Example: Spread widening hit CCC bonds first as risk-off took hold.
Total-return swap leverage: Synthetic exposure that masked position size.
Example: Total-return swap leverage hid Archegos’s concentration until margin calls hit.

Energy

Backwardation: Spot above futures, signaling tight prompt supply.
Example: Brent backwardation steepened as inventories fell.
Crack spread: Refining margin between crude input and fuel outputs.
Example: A wider crack spread boosted refiners despite flat crude.
Gas-to-oil switching: Power generators shift from gas to oil when gas prices spike.
Example: Gas-to-oil switching raised distillate demand during the cold snap.
Inventory-driven oil slip: Crude easing on stock builds even without new fund shorts.
Example: Crude’s inventory-driven oil slip lacked follow-through from funds.
Oil above $100: Crude spiking on invasion-driven supply fears.
Example: Oil above $100 underscored the invasion’s supply shock.
OPEC+ slow-walk supply: Gradual output hikes despite a tight market.
Example: OPEC+ chose to slow-walk supply increases despite $80+ crude.
Strategic reserve talk: Governments weighing releases to cap prices.
Example: Strategic reserve talk resurfaced as prices squeezed consumers.
Supply-shock oil bid: Drone strikes tightening near-term crude availability.
Example: A supply-shock oil bid followed the refinery strikes.
Underinvestment squeeze: Thin spare capacity keeping prices jumpy into winter.
Example: An underinvestment squeeze left little spare capacity for winter.

Equities

Defensive rotation trigger: Hot data could send flows back into safe assets.
Example: A hot payrolls print could be the defensive rotation trigger.
ECM thaw watch: Success boosting hopes for Instacart and Klaviyo.
Example: Bankers kept ECM thaw watch as more IPOs queued up.
ETF purchase halt: Ending equity-buying support alongside normalization.
Example: Ending ETF purchases signaled a quieter BOJ footprint in equities.
Factor rotation: Flows shift between style factors like growth, value, momentum, and quality.
Example: A pivot to value signaled a factor rotation out of crowded growth names.
Family office transparency: Calls for clearer disclosure of private leverage.
Example: Regulators renewed family office transparency pushes post-Archegos.
Fee war kickoff: Issuers slashing costs to win early assets.
Example: Issuers launched a fee war kickoff to grab ETF market share.
First-day 25% pop: Debut rally as investors test risk appetite.
Example: The first-day 25% pop emboldened other tech issuers.
Forced block unwinds: Banks dumping concentrated media and tech stakes.
Example: Forced block unwinds hammered media and tech stocks in a day.
Futures-to-spot rotation: Investors shifting from futures products and trusts.
Example: Futures-to-spot rotation hit volumes in existing trusts.
High beta: Stocks that move more than the market, amplifying upside and downside.
Example: High-beta tech lagged when rates jumped and risk appetite cooled.
Multiple expansion: Stock prices rise faster than earnings, lifting valuation multiples.
Example: AI enthusiasm drove multiple expansion even as profits leveled off.
Rate-sensitive valuations: Long-end yields influencing tech multiples.
Example: Rate-sensitive valuations could cool if long yields climb again.
Rotation: A shift of capital between sectors as risk appetite changes.
Example: Rotation into energy and defensives drained momentum from tech.
Sector rotation to energy: Flows leaving megacap tech for real-asset plays.
Example: Sector rotation to energy stole flows from megacap tech.
Spot ETF approval: SEC greenlighting exchange-traded bitcoin funds.
Example: Spot ETF approval drew mainstream flows into bitcoin overnight.
Structural Rotation: A durable shift in market leadership driven by fundamentals rather than short-term flows.
Example: A structural rotation pulled capital out of megacap tech and into energy and defense.
Top-of-range pricing: IPO set at $51 valuing Arm above $54B.
Example: Top-of-range pricing signaled strong demand for Arm shares.

FX

Carry trade: Borrow low-yielding currency to fund longs in higher-yielders.
Example: JPY-funded carry trades unwind fast when volatility spikes.
Dollar bid: Greenback strengthening on hawkish repricing.
Example: A dollar bid followed the upside inflation surprise.
Dollar smile: USD strengthens in stress and strong U.S. growth; weakens in stable global expansions.
Example: The dollar smile explains why USD rallied during risk-off despite soft U.S. data.
Dollar Strength: A rising U.S. dollar that pressures gold and EM assets.
Example: Dollar strength hit EM FX and capped gold as haven flows built.
Dollar Weakness: A decline in USD value that boosts commodities and EM assets.
Example: Dollar weakness boosted commodities and EM funding conditions.
Flow-driven dollar bid: USD strength fueled by liquidity flows more than macro shifts.
Example: A flow-driven dollar bid persisted even without new macro catalysts.
Haven Demand: Safe-haven buying that lifts the dollar when risk assets wobble.
Example: A spike in haven demand pushed the Dollar Index higher as equities hesitated.
Mild dollar softness: USD easing slightly amid cautious positioning.
Example: Mild dollar softness reflected cautious positioning rather than conviction.
Safe-haven bid: Flow into perceived stable currencies when risk assets sell off.
Example: A safe-haven bid lifted USD and CHF when equities slid.
Softer USD tailwind: A weaker dollar amplifying commodity strength globally.
Example: A softer USD tailwind amplified commodity gains.
Sterling slide: Currency punished alongside the gilt selloff.
Example: The sterling slide mirrored the gilt selloff after the budget.
Yen firming drift: Currency strengthening as rate differentials narrow.
Example: A yen firming drift followed narrowing rate differentials.

Geopolitics

Risk premium: Extra return investors demand to hold assets exposed to geopolitical shocks.
Example: Oil carried a higher risk premium after tensions escalated.
Sanctions premium: Pricing risk of restricted Russian commodities and banks.
Example: Traders added a sanctions premium to Russian-linked commodities.
Sanctions risk: Possibility that trade or financial restrictions disrupt assets or flows.
Example: Sanctions risk widened spreads on companies linked to the conflict.
Supply-chain reroute: Shifting trade routes to avoid conflict zones or restricted regions.
Example: A supply-chain reroute through alternate ports raised shipping costs.

Liquidity

Bank run spiral: Tens of billions in deposits fleeing in a day.
Example: A bank run spiral emptied SVB’s deposits in a day.
Bid-ask spread: Gap between buy and sell quotes; widens when liquidity thins.
Example: The bid-ask spread blew out after the data release.
Hedging Flow: Capital moving into protective assets during uncertainty.
Example: Hedging flow into gold and defense stocks stayed steady as macro risks built.
Holiday liquidity drift: Markets moving in a narrow band into year-end.
Example: Prices meandered in a holiday liquidity drift into year-end.
LDI collateral squeeze: Pension hedges strained by 100 bp yield spikes.
Example: LDI collateral squeeze forced pension funds to dump assets.
Liquidity backstop wall: SNB providing over CHF 100B to steady funding.
Example: A liquidity backstop wall from the SNB aimed to stop outflows.
Market depth: Volume available at quoted prices without moving the market.
Example: Thin depth made it easy for small orders to move futures prices.
Slippage: Execution price deviates from the intended price due to market impact.
Example: Large orders in illiquid names faced heavy slippage.

Macro

6.2% headline shock: Inflation at a three-decade high.
Example: The 6.2% headline shock jolted rate expectations.
Data-pause positioning: Markets idling ahead of the jobs report before taking direction.
Example: Desks kept risk light in data-pause positioning ahead of payrolls.
Data-watch posture: Traders waiting for December prints before taking risk.
Example: Funds stayed in a data-watch posture waiting for December prints.
Diffusion index: Survey metric where readings above 50 show expansion and below 50 show contraction.
Example: The PMI diffusion index slipped below 50, hinting at slower manufacturing.
Disinflation signal: Slower shelter and goods prices pulling CPI below forecasts.
Example: The softer shelter print was a disinflation signal that let the 10-year dip.
Energy-driven inflation: Higher fuel costs complicating central bank tightening.
Example: Energy-driven inflation complicated central bank tightening plans.
Growth-cooling rationale: Slower activity used to justify easing.
Example: Officials cited a growth-cooling rationale for moving ahead of the Fed.
Macro Anchor: Real assets (energy, commodities, infrastructure) that stabilize portfolios during policy or geopolitical uncertainty.
Example: Energy and infrastructure served as a macro anchor while central-bank messaging whipsawed risk assets.
Melt-Up vs Controlled Reset: A two-path market dynamic that oscillates between euphoric rally and orderly correction.
Example: Positioning flipped from a melt-up vs controlled reset as each data print hit tape.
Output gap: Difference between actual GDP and potential GDP.
Example: A closing output gap reduced slack and kept wage pressures elevated.
Risk rally reaction: Equities jumping and the dollar weakening on the tone.
Example: Stocks staged a risk rally reaction to the speech.
Services inflation watch: Council focused on wage and service pressures.
Example: Services inflation watch stayed front and center for the ECB.
Soft landing: Inflation cools without a sharp rise in unemployment or a recession.
Example: Markets priced a soft landing after growth held up while inflation eased.
Unfunded mini-budget: Tax cuts without offsets jolting gilt markets.
Example: The unfunded mini-budget torched gilt confidence in hours.

Options

Gamma squeeze: Dealer hedging on short calls forces buying, driving the underlying up.
Example: A gamma squeeze in a popular meme stock sparked a sharp intraday rally.
Skew: Relative pricing of out-of-the-money puts versus calls.
Example: Steeper skew showed stronger demand for downside protection.
Speech-driven volatility: Markets parsing language for pause timing.
Example: Speech-driven volatility spiked around each line of the Q&A.
Vega bleed: Loss in option value as implied volatility drifts lower over time.
Example: Long premium trades suffered vega bleed after the event passed quietly.
Volatility whipsaws: Price swings as inflows meet profit-taking.
Example: Volatility whipsaws followed each headline in the first trading sessions.

Rates

2024 cut path: Futures already penciling in next-year easing despite hawkish optionality.
Example: The curve still sketched a 2024 cut path despite Fed optionality.
5.25–5.50% terminal band: Policy rate after July’s 25 bp move.
Example: Markets treated 5.25–5.50% as the likely terminal band after the July hike.
5% yield milestone: The 10-year briefly topping a 16-year high.
Example: The 5% yield milestone spooked duration buyers in October.
Accelerated taper risk: Pressure on the Fed to speed asset-purchase runoff.
Example: Accelerated taper risk crept into discussions after the CPI print.
Auction takedown watch: Monitoring demand quality as term premia drift.
Example: Traders put auction takedown watch front and center for the week.
Bill-issuance surge: Heavier Treasury supply hitting the market post-ceiling.
Example: Dealers braced for a bill-issuance surge after the debt ceiling deal.
BoE rescue buying: Temporary purchases to stabilize long-end yields.
Example: BoE rescue buying steadied the long end temporarily.
Bull steepener: Long-end yields fall faster than the front end, steepening the curve in a rally.
Example: Soft data triggered a bull steepener as 10s rallied harder than 2s.
Curve flattening: Front-end repricing faster than long yields on growth worries.
Example: Curve flattening showed investors doubted the growth runway.
Curve inversion: Short-term yields exceed long-term yields, often seen as a recession warning.
Example: A deeper curve inversion signaled markets expect cuts after a policy peak.
Curve-flattening recession tell: Growth fears showing up as long yields lag.
Example: The curve-flattening recession tell flashed as growth fears mounted.
Cut pricing pull-forward: Futures moving 2024 easing expectations closer.
Example: Fed funds futures showed cut pricing pull-forward into mid-2024.
Data-dependent stance: Fed willing to hike again only if inflation progress stalls.
Example: Powell repeated a data-dependent stance before deciding on another move.
Dot-plot jump to 3.4%: Year-end rate projections reset sharply higher.
Example: The dot-plot jump to 3.4% reset year-end rate expectations overnight.
Downshift to 50 bps: Ending the string of 75 bp hikes.
Example: December’s downshift to 50 bps marked the end of jumbo moves.
Duration mismatch losses: Long-dated Treasuries eroding capital as rates rose.
Example: Duration mismatch losses eroded capital as rates climbed.
Earlier liftoff pricing: Futures pulling 2022 hikes forward.
Example: Earlier liftoff pricing showed up across futures curves.
Fed path repricing: Markets yanking near-term hikes after the failure.
Example: Futures showed Fed path repricing with hikes quickly priced out.
First cut to 3.75%: ECB trimming the deposit rate after its hike cycle.
Example: The first cut to 3.75% opened a cautious easing path.
Front-end hawkish pricing: Markets still baking in aggressive summer hikes.
Example: Front-end hawkish pricing held even as stocks bounced.
Half-point liftoff: First 50 bp hike since 2000 to tackle inflation.
Example: The half-point liftoff set the tone for a faster hiking cadence.
Higher-for-longer message: Emphasis that inflation is still too high.
Example: Powell’s higher-for-longer message faded the initial rally.
Long-end whiplash risk: Bond desks bracing for yield spikes if payrolls surprise.
Example: Bond desks warned of long-end whiplash risk if wages surprised.
Long-end yield retreat: Cooling PMIs pulling Treasury yields lower.
Example: Soft PMIs triggered a long-end yield retreat.
Measured path signal: Markets pricing gradual follow-on cuts.
Example: Guidance delivered a measured path signal rather than a rush to ease.
Mortgage-rate squeeze: Elevated yields pushing housing costs toward multi-decade highs.
Example: The mortgage-rate squeeze pushed housing affordability to new lows.
Negative-rate exit: BOJ lifting the overnight rate to 0–0.1%.
Example: The negative-rate exit closed a decade-long experiment in Japan.
No-75-for-now relief: Powell’s pushback that briefly calmed risk assets.
Example: Equities rallied on the no-75-for-now relief in May’s presser.
Optionality on quarters: Keeping flexibility for more 25 bp moves.
Example: Optionality on quarters let the Fed keep tightening without shocking credit.
Peak-rate narrative: Markets betting the hiking cycle is effectively done after this print.
Example: Traders leaned into the peak-rate narrative after the cooler CPI.
Positive real rates: Policy settings now above inflation, tightening conditions.
Example: Positive real rates signaled restrictive policy even without further hikes.
QT countdown: Balance-sheet reduction flagged as the next tightening step.
Example: Markets started a QT countdown once balance-sheet runoff was flagged.
QT runoff caps: Balance-sheet roll-off starting at $47.5B then stepping to $95B.
Example: Investors parsed QT runoff caps to gauge how fast liquidity would drain.
Quarter-point liftoff: First hike since 2018 ending the zero-rate era.
Example: Quarter-point liftoff finally ended the pandemic zero-rate era.
Real-yield relief: Softer inflation easing pressure on risk assets via lower real rates.
Example: Lower breakevens delivered real-yield relief for equities.
Risk-free premium questioned: Symbolic hit to the U.S. credit halo.
Example: Investors briefly had the risk-free premium questioned after the cut.
Safe-haven rally: Treasuries bid as equities sell off.
Example: A safe-haven rally pulled Treasury yields lower intraday.
Seven-hike dot path: Median outlook mapping six more moves in 2022.
Example: The seven-hike dot path mapped a brisk 2022 tightening run.
Slower-pace hint: Powell flagging smaller moves ahead.
Example: Powell’s slower-pace hint teed up a 50 bp move in December.
Sprint toward neutral: Markets pricing a faster path to regain policy credibility.
Example: Futures priced a sprint toward neutral after the June meeting.
Supersized 75 bp catch-up: The Fed’s leap after the hot May CPI print.
Example: The supersized 75 bp catch-up was a scramble to restore credibility.
Supply overhang: Heavy Treasury issuance pressuring long-end yields.
Example: A looming supply overhang kept Treasury auctions under pressure.
Term premium: Extra yield investors demand to hold long-duration bonds over rolling short rates.
Example: Rising term premium pushed the 10-year higher even without new hikes priced.
Term Premium Rebuild: The gradual return of extra compensation required for holding long-dated bonds under uncertainty.
Example: A term premium rebuild nudged 10-year yields higher even without new hikes priced.
Term-premium rebuild: Extra compensation rising with fiscal and duration risk.
Example: Supply jitters fueled a term-premium rebuild at the long end.
Terminal dot at 5.1%: Higher peak projected for 2023.
Example: The terminal dot at 5.1% surprised a market pricing a lower peak.
Terminal higher caveat: Warning that rates may still end up above prior peaks.
Example: He paired it with a terminal higher caveat to avoid a dovish read.
Treasury Firmness: Steady long-end yields signaling investors are bracing for data risk rather than crisis.
Example: Treasury firmness into payrolls showed desks hedging for uneven data, not panic.
YCC retirement: Scrapping the hard cap on JGB yields while keeping flexibility.
Example: YCC retirement lifted caps on long JGB yields.