Today the Short sterling traders have come out in force as the minutes indicated pretty much that it is very unlikely we will have any more QE. Across the strip we are trading well above 1 million contracts traded. Jun13 Short sterling has traded 271k as of 2.30pm, when lately we have been lucky to have 30k volume traded the whole day in these individual contracts.
So what has been happening; Well there was a 35k spread put through long 5s in Jun13Sep13. I also saw a big chunk sold at 4s in Mar13Jun13, so possibly butterlying it up Mar13Jun13Sep13.
There was also 19k that went short -2s Jun13Sep13Dec13 fly. So it seems they are of the view that we will get more steepening further down the curve I.e possible rate increases into mid 2013s to late 13s.
A pretty sizable bet for sure. Either way it was good to see the volume coming back into these contracts and hopefully we get some follow through. Time will tell!
Gilts fell from 115.92 to a low of 114.80, where as Bunds have reached mid 140s again, which is getting back into short territory again. Worth a go again I thinks!
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