TP ICAP chief Breteau sees 'quiet interspersed with dislocation' in 2024

Nicolas Breteau, the chief executive of TP ICAP, has said the markets in 2024 will be characterised by “periods of quiet interspersed with dislocation and volatility” as the need for supply-side reforms reaches breaking point in the UK.

Breteau, who has been chief executive of London’s largest inter-dealer broker since mid-2018, said 2024 is likely to be dominated by what he called “three known unknowns”: the end of easy money, the curtailment of fiscal expansion and ongoing geo-political tensions.

Breteau, the chief executive of Newedge before joining TP ICAP, said: “The continued divergence in economic performance between the US and the UK and continental Europe will continue. Things will be choppy: periods of quiet interspersed with dislocation and volatility.”

Breteau added: “The need for a new wave of supply-side reforms – put off for many years - will become pressing. Most governments have reached the limits of fiscal expansion after a decade of significant State spending.”

The TP ICAP chief went on to suggest that monetary policy will continue to dominate the agenda, with interest rates staying “higher for longer than people expect”.

Commenting on the UK, Breteau added: “Fiscal policy action will be modest: the Government has little headroom. Substantial public sector reform might be in the offing with a Labour Government (were there to be one) better placed to make this happen.”

He added: “Supply-side reforms may come to the fore. Reforms that speed up economic growth but don’t cost a lot will be prioritised: infrastructure planning, private sector housing provision etc.”

Breteau’s comments came as traders steel themselves for what could be another challenging year amid ongoing geopolitical tension and uncertainty about benchmark interest rates.

Eric Leininger, CME Group’s executive director of financial research and product development, said late last month a slowing US economy could have a big impact on the Fed’s approach and US debt levels.  

CME Group said on Wednesday 2023 was its third consecutive annual record for trading volume as the US group reaped the benefit of ongoing uncertainty around US rates and equity indices as well as global commodity prices. 

A research paper released by Coalition Greenwich on Wednesday suggested Securities and Exchange Commission chair Gary Gensler, nominated by Biden in early 2021, could become more combative in 2024 if he believes his tenure may be cut short by a Biden loss in November.

TP ICAP reported in October revenue for the first nine months of 2023 up 5% to £512m, driven by Liquidnet, a business acquired by Breteau in March 2021, and its growing data unit Parameta.