Friday, 28 March 2014

Markets not really going anywhere!

This week we had a nice little sell of in equities, and today we had the inevitable big bounce, but there's been alot of selling into strength which is something new, that wasn't there last in previous weeks and last year. Normally this would just ramp up to new highs, which shows the mentality has definitely changed.
There wasn't that much to do in the Spreads with the main trade I managed to get off this week was going long all the Euribor Spreads as the inevitable fade happened again, and I used that opportunity to load up long. Got my bounce I was looking for and took half ticks on it all. Notably going long 4.5s in Jun15Sep15 and getting out 5s.
I'm currently long 18s in Jun16Sep16 Short Sterling, as the long end is seeing weakness in this space relative to the front end. However I'm looking for some kind of correction here before the BoE meeting next week.
Next week will have the usual raft of data, so looking forward to it, to see where we stand in terms of numbers. Hoping for a good one!

Friday, 21 March 2014

Yield Curve Steepens on FED talk

Wednesdays Fed meeting was pretty much as expected although there are those who are looking for an earlier rate increase, possibly next year. This steepened the yield curve with Bunds down 100 points plus since, and Euribor and Short Sterling spreads rising across all combinations. As I said before, with Spreads at such low levels the only trade was to buy, as the risk is to the upside, and downside risk was minimal given that we are at super low rates everywhere. So luckily going into the FED I was long, and took my small profit. Since then I have been selling into the rally selling 4s and 4.5s in Mar15Jun15 and 5s and 5.5s in Jun15Sep15, taking small profit on both.
Elsewhere Stocks took a dive initially on Wednesday, but as usual are ramping back up and are on the verge of making new highs in the US. Seems like there is nothing that will get in the way as the amount of cash on the sidelines has to go somewhere and so any dip will be a buy in my opinion regardless of anything that goes on. But I guess its that complacency which marks maybe a contrarian play. But by the looks of it shorts keep getting whacked!
Quite a bit of data out next week, so hoping for some good moves!

Friday, 14 March 2014

Small pop up in Spreads short lived

Just as I said yesterday there was a small opportunity to get out my long spreads and lucky I didn't hang around and I took it, as its all gone back down again. The pressure on the curve remains and so I will be buying the dip, and nick a half tick on any rally, as in reality this is the only play right now in my opinion. I find it hard to short at these levels so I prefer buying. Out at 3.5 in Mar15Jun15, 4.5s in Jun15Sep15 and 6s in Sep15Dec15.
Markets look under pressure still, and it feels very vulnerable for sure, I think there is a bit more to go so any significant rally would be worth a sell. 

Thursday, 13 March 2014

Euribor Spreads hits new lows

As the market has come off significantly off late, the Euribor Spreads keep inching downwards to a point where there in my opinion not really much room down to go. The risk to reward for an upside move here is very favourable so personally I have kept adding to my position. I've been playing it relatively small as generally the action has been very slow so the conditions generally haven't been good to lump in big. As I write I'm long 3s and 3.5s in Mar15Jun15, Im long 5, 4.5 and 4s in Jun15Sep15, and long Sep15Dec15 long 6.5s and 6s. I will be willing to add more on should it continue going lower as I think we will get a small pop soon, but as mentioned previously any push up would be an opportunity to sell and I would expect the spreads to come back down again.

Equities are taking a big beating today, but still at very high levels, despite the big drop ES is still around 1847 which is about 2% from intraday highs. Given that next week is triple witching week, we could get quite a bit of volatility. Also with the FED meeting next week, coupled with a raft of UK data we should get ore volatility.

Friday, 7 March 2014

Stocks retreat as NFP beat expectations

After a pretty dull week where we have seen low volume in Bonds, and Stocks inching upwards making new highs on a daily basis, today's non farm payroll made for some nice volatility. Although the deviation wasn't that much, the number of jobs created was 25k more then the very low expectations which has now pretty much ensured the FED will continue on its path of tapering and that the economy is on the right path.
Trading wise Bonds sold off as expected, and my first instinct was to sell any rally in the spreads as the number wasn't that great and a good opportunity to fade the initial move. This worked out, although it was a slow grind as I managed to short some 23s in Sep15Dec15 Short Sterling, and nick a tick of it. Also the most obvious play I guess was selling the indices off the open, as there always seems to be a reverse reaction on the cash market open on NFP days.
The previous two Non Farms where we got very bad numbers, had the initial reaction you would expect and then reversed big time as the day went on. Now today we had a positive reaction as you would expect, but this pretty much set up the perfect storm, as we were on all time highs, VIX has slowly been rising and the risk/reward on the open, being up 8 dollars in ES and 18 dollars in Nasdaq presents a very poor buying opportunity, so on this particular occasion it made sense to short. Now whether this is going to signal a turn around to the constant buying or merely a temporary pause we will have to see.

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,...