Thursday, 18 October 2012

Euribor spreads push up on the back of European optimism

After trading in a very narrow range, with hardly any volume, we broke up in these Euribor Spreads, with no real pull back on the way up. Jun14 Sep14 went from 6.5s to 8.5s, Sep14Dec14 went from 7s to 9s, and pretty much we had a 4 tick price movement along the mid part of the curve.
Now looking at a longer chart, it looks like a perfect trade, being long the bottom of the range, and now watching it push up. But as a day trader, with such a narrow range in the past week I have been inclined to sell it, and this got me in trouble as I had to average aggressively as it went up.
Thankfully we had a rally in the Bund today, after the large drop yesterday and this gave me my out in these spreads. In all ended up being a very roundtrip intensive day but its a nice change to see some action in the short end as its been dead recently.

Else where, as I thought last week this Bund has come off the channel at 141.50s and has pretty much gone down 200 ticks since, on the back of positive news from Europe and upbeat data from the US, including a positive Philly Fed report, all conveniently before the US elections. Its still up in the air who will win the election but I still think we will get good data out, but with the Bund in a range between 139-142, so I think we are likely to push up mid range sooner then we go down.

Not much more data out for the week, so the market will be dictated by Earnings, and the usual remarks out of EU officials.

Monday, 8 October 2012

Non Farm after thought

Well I said it in the last post that the way it was looking we would get a good non farm, but not in the way I would have thought. Rather then a good amount of jobs added we had a dramatic reduction in the unemployment rate from 8.1% to 7.8%. It is very timely actually but it lead to some volatility initially before it all faded before the close of the US session.
Theres no disguising that there is still a lot of problems, and with the run in to the US elections I wouldn't be surprised to see more and more good data, to give the President a boost, before the Americans go to the polls.
So going forward I would expect to see some pressure on the Bund, unless we have any major announcements out of the EU.
Spreads are very slow and static at the moment so best to wait for good levels and hold until it comes your way.
Other then that not much else to report.

Wednesday, 3 October 2012

Upbeat data points to a good jobs number?

A strong ISM manufacturing and ISM Non-Manufacturing coupled with a slightly stronger ADP reading bodes well for a potential upside surprise in this Fridays non farm payroll number. Although there has been discrepancies in the past between ADP and NON farm, I got a feeling we are going to get a good number this Friday, which coincides with the run in to the presidential elections...hmm conspiracy theorist say what you will!
Thus we have maintained these near high levels in the equity markets as Europe isn't creating many new headlines, so in that aspect there is no real reason to go down, and when ever we do we simply seem to be brushing it off.
Although I do feel we will come off cause the market doesn't represent the current state of the economy, near term I think we will continue higher.
STIRS have been fairly static lately, with low volatility meaning having to hold on to spreads for much long then usual. As the Bund keeps on rising, spreads have been gradually coming off, and as they're coming near the bottom of the range, (on many 3 months spreads) I've been inclined to buy them. Sep13Dec13s at 4.5 is a level which has held strong before so have been trying to load up on this as it comes.
Tomorrow we have ECB press conference, but this is likely to be a non event as the main actions were taken last month, but any surprise announcement will be welcome.

Short Sterling spreads nudge higher on hawkish Fed; Walmart blowout

As most must know trading Short Sterling is a bit of a bore, and has been for a while. Having managed to get out of my 2 month hold before,...