Good day, everyone. My name is Charlie Bastlin, and today I'll be a guest interviewer on behalf of Real Vision.

I've had an episodic macro economic commentary as the convexity maven, and I currently manage a hedge fund of one. Me.

Prior to this, I spent 35 years on Wall Street where my claim to fame is that I created the move index and the VIX, which is a VIX for bonds.

I have been invited to be an expert inquisitor to draw out the thoughts of our guest, Eric Nolan.

Eric is the executive director and senior economist at the CME Group.

He is responsible for generating economic analysis on global financial markets by identifying emerging trends and evaluating economic factors and forecasting or impact on the CME Group.

The company's business strategy and upon those who trade into various markets.

Prior to the CME Group, Eric gained more than 15 years of experience in financial services industry, working for investment banks and hedge funds, both the United States and France.

Eric called the battles degree in economics and political science from St. Mary's College, Maryland, and a master's in statistics from Columbia University in New York. He's also a CFA.

Eric, we're going to start. I'm looking to put you in the spot, but we are speaking slightly before the Fed, at least in their statement.

So I'm not going to ask you to predict the outcome, but from 30,000 feet, how do you think that that's policy since the start of a pandemic that impacted the markets and maybe more broadly since the GF, financial crisis in or not?

Well, thank you so much for agreeing to do this. It's just a tremendous pleasure to talk with you, Harley, especially given your incredibly long experience in the real trenches of options trading.

I think the Federal Reserve has a bigger impact on options markets than many people realize.

I think that when people think of options, they often think of it in terms of volatility spiking in response to short-term price changes or kind of drifting downwards as markets calm down.

But I think Central Bank liquidity plays a really key role in all of this. And in particular, since March, since the COVID crisis kind of got to its acute phase in the financial sense, the central banks, including the Federal Reserve,

which peers around the world, the ECB, the Bank of Japan, Bank of England, et cetera, they have really tried to keep a lid on market volatility.

But I think they've been more successful in some areas than others. They have gotten volatility on short-term interest rates, obviously, to come down to exceedingly low levels.

You see that in futures on the Eurodollar. You see it on five-year government bond futures as well. You even see it as far up as 10 years.

And you also see it in the currency markets, too. The currency markets were very disjointed for a while in March when it was a sort of insipient dollar funding crisis.

The central banks got together and provided massive swap lines, really kind of clamped down on volatility.

So when you look at the major exchange rates, the implied volatility are now mostly down to where they were pre-pandemic.

Whether you've had less success, however, are things in areas that they have less control over. So very long-term interest rates.

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