Equities are continuing the weakness this week, and we breached 140 in the Bund, nearing record low yields in the German 10 year, as well as other 10 year contracts.
Euribor Spreads continued lower, and now breaching previous support levels, but as I do I'm buying into them, especially the back months as the spread is becoming too tight given its so far out, and probabilities favour a bounce. Im long Dec13Mar14 at 7s, given that we were trading above 10s a few weeks back, I think there is good value in this, although it still may drop a bit before going up.
Given the long holiday the 7am open was always going to provide some volatility, and we got it with a massive spike down in the CAC as it looked like some dumped a boatload at market causing a 100 fat tick spike down in a matter of seconds before it retraced later in that 1 minute bar.
See below:
The move in the CAC was very brutal and it was either a make or break if you were involved.
Looking at Bonds, it will be interesting to see how long the Bund can hold these ultra low yield levels, and as has held true before, I think we are good for a 100 pips at least to the downside, although I think the nearer the Bund is to 141, the more appealing the trade will be.
Good Luck
Thoughts and commentary on daily market action, plus my trade log in equities and futures.
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