Wednesday, 24 June 2015

Fixed Income technicals

Bund futures trade up 24 ticks at 150.93 this morning after trading as high as 151.06 earlier after slightly weaker German IFO data helped underpin the slight bid tone this morning. A break above the highs should see a test of 151.36, and a break above which could see strength up to 151.79. To the downside 150.60 remains good support, with a move below this to target yesterdays lows at 150.02 and then 149.93/85.

UK Gilt futures saw earlier weakness opening at 114.66 down over 20 ticks on the back of BOE member comments stating that the BoE should be ready to raise Interest rates as early as August. It is currently trading 114.65 trading at the lows of the day. Momentum remains to the downside with support at 11.48 and 114.27. A move to the upside would target 115.36.

BTP futures trade flat this morning having been down earlier in the session trading at 131.94 up 5 ticks. The future is trading mid range currently with upside resistance seen at 132.66 which is yesterdays high with a move lower targeting 131.56 then 130.57.

Thursday, 4 June 2015

Bunds trade sub 150 on a 600 tick drop in 3 days

The past week has been a explosive week for the Bund with a 600 point drop since midday Monday. June Bund traded as low as 149.70 having been at 155.70 earlier in the week. This represents an increase of more then 200% in the yield in this time. Its funny as many analysts were calling for the Bund to be negative and now its pushing 1%. Tells you how much the analysts know. The unwind has been massive, with such a one way trade over the past year its inevitable that you would get an aggressive unwind. The drop in the Bund has sharply steepened the yield curve, with the Bund Bobl spread a mere hedged outright.
European indices have felt the pressure as the fall in the Bund has given strength to the Euro. The Euro trading at 3 week highs has put the Dax under pressure as export names get smacked.
Trading wise as I've said before, its all about deep pockets. The swings in the Bond markets and equities mean getting entry precision is vital. Keeping size small and allowing a bit more room for volatility is key in trading well at this time. I have shifted my focus more to options of late, with my long term UVXY position a real dog at the moment, but I continue to roll it over against my better judgement. Volatility has been high on bond plays with some opportunities in playing TLT as well as the Bond Futures optionss, with the recent move down providing opportunities to sell some puts. Trying to catch the falling knife in the future is a bit to rich for my blood right now, so options are my best play. Despite the fall in Bonds I think this economy isn't strong, its been sluggish for years, and so will always put off the central banks from doing anything on rates, and while inflation stays subdued, despite these moves rates are not going anywhere.  

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,...