BIS Derivatives - Mixed Messages

I read this report as a considerable global slowdown. Check it out and see what you come up with. Even though contracts and values expanded, they expanded in opposite areas to what could be interpreted as anything close to real growth. {aggregate global derivatives' cashing costs are mounting - they fall on the nations where cashed, not where written}

BIS - Derivatives

Derivatives markets
The aggregate turnover of exchange-traded financial derivatives contracts monitored regularly by the BIS shrank further in the fourth quarter of 2003. The combined value of trading in interest rate, stock index and currency contracts amounted to $207 trillion, a 7% decline from the third quarter (Graph 4.1). Activity was uneven across the major market risk groups, with turnover in interest rate contracts falling substantially and that in stock index and currency contracts growing at a moderate pace. The overall decline in the turnover of interest rate instruments, the largest of the broad market risk categories, resulted from a drop in both money market and government bond contracts. Nonetheless, for 2003 as a whole the aggregate value of turnover in financial contracts rose considerably. Transactions during the year reached $874 trillion (see the box on page 44). This represented a 26% increase, which compares with increases of 17% and 55% in 2001 and 2002 respectively. Business was brisk in all of the broad market risk categories. Activity in the small market for currency contracts was particularly buoyant after a long period of stagnation.

Fixed income contracts slow down in calmer markets
Aggregate trading in exchange-traded interest rate contracts declined in the fourth quarter of 2003. The volume of transactions fell by 9% to $184.5 trillion, compared with a decline of 10% in the third quarter. This overall slowdown in fixed income business resulted from a drop in the two major market segments, namely money market and government bond contracts. Turnover in short-term interest rate contracts, including eurodollar, Euribor and euroyen, fell by 9% to $157.7 trillion, while business in longer-term instruments, including US Treasury notes, German government bonds and Japanese government bonds, weakened by 10% to $26.7 trillion (Graph 4.3). Trading in fixed income contracts declined across most geographical regions. In North America, business weakened by 9% to $93.7 trillion. Money market contracts fell by 8% to $84.7 trillion and longer-term instruments by 15% to $9 trillion. In contrast to earlier quarters in 2003, there was little difference in the behaviour of the various money market and government bond contracts or in that of futures and options. ... across most regions ... Activity in fixed income contracts declines ...Link