Friday, 28 December 2012

End of Year Review

To say this has been a tough year has been an understatement. I have made 40% of what I did last year, which was disappointing but you have to take the positives out of it and hope it will be better next year.
When looking back the main issue really was lack of volume. Due to various factors including the decline of MF Global and PFG best, confidence in the market isn't what it once was and hence more people staying on the sidelines and have there money in safe investments rather then be in the market. This is a shame really but a reality. I can only hope the regulators get there act together to stop scandal mania happening as frequently in the future.

As far as the markets are concerned, with the pledge of low rates for multiple years and a generally sluggish economy, have seen Bond yields remain at record low yields for the best part of the year, coupled with rising equity prices which goes against the conventional correlation but with no return to be found in other asset classes, it was inevitable that money going into stocks was the best bet.
With spreads, as you would expect has been in a super tight range, which has made it easily predictable  but the low volume environment has meant that its been a slow trade, with multi day holds being the new day trading!
Also with the low rate environment reaction to data has been very mute, so news trading has been quite tough as well.

Looking to next year, I certainly have more optimism, as the FED has pinned a target on the employment rate at which it would consider moving on rates. This would give the market a focus, and so any good news will more likely to have a better reaction. I also feel we mite get more volume next year also as on the face of this year, the gains in equities would have made people feel they have missed out. Secondly if we have better data we mite incur more speculation on rate movement which should bring people in from the sidelines and lastly, I cant imagine it to be as bad as this year so by default it should be better!

For my own personal trading, I will aim to be a bit more bold as this year I was quite defensive. Trade with more size, and really give it a go. Ill keep you informed on how it goes!

Happy New Year and best of luck for next year!

Saturday, 8 December 2012

Non Farm payrolls surprises everyone!

A 61k beat on consensus and a drop in the unemployment rate of 7.7% below the expected 7.9% provided a surprise boost to the markets, as the effects of hurricane Sandy didn't impact the payrolls as much as many had expected.
The Bund fell 25 points of the data, with the S&P up 9 fat ticks on the back of the data. We did however fade this however, and the Bund along with Euribors surged higher on the back of a possible negative deposit rate from the ECB, this was later quashed by ECB officials, but the fact it was discussed in this month ECB meetings has put the possibility on the table.
Spreads continue to narrow, and are at low putting a squeeze on players long the spread, myself included.
I personally will continue to average, hoping for a small bounce to get out again.
There has certainly been alot more volume over the past week so hoping it continues, as its made trading that slight bit easier, if there is such a thing.
Hoping for more of the same next week!

Monday, 3 December 2012

Spain request formal bank bailout!

Spain makes formal request for EU bank bailout funds, expects fund for bank recapitalization around Dec 12th. They confirm request for 37 Billion Euros for 4 banks.

On the back of this we had a spike to the downside int he Bund of 30 pips before retracing on the back of heavy volume. As this wasn't a country bailout, more it was a Bank bailout, is why we haven't seen much more of an initial down move.

The move was well timed as it helped me get out of my long Euribor Spread positions, which I was holding for ages!

Market Analysis

A look at the market action, largely dominated by fiscal cliff concerns, as conflicting reports on whether there will be some sort of resolution looms. Personally I think it will be sorted cause they simply cant afford to not let it work.

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,...