After a big two day rally in stocks and fall in bonds, Stocks are looking weaker again and Bunds have reclaimed 140, as Chinese GDP disappointed. Part of the rise in the market yesterday was on the rumour of a stronger Chinese GDP number, so the fact it came in weaker caught the market off guard.
Since the last post we did have that drop in the Bund which always seems the case when we breach 140, and we came off almost 100 ticks to trade 139.49 low from a high of 140.41. Another move to this type of level would most likely be another high probability sell.
In the short end the Euribor spreads bounced as expected, as Mar13Jun13 went from 3s to 5s, Sep13Dec13 spreads is trading 8/8.5, after being long at 7s I only managed to nick a 1/2 tick, as it was struggling around 7s for 2 days, but patience was the key for the move up in any of the spreads.
At this moment finding it a bit difficult to commit one way or the other, volume is a lot lighter then the beginning of the week, which is making trading a bit more difficult. Right now im looking to buy in short Sterling at 1s in Mar13Jun13, and generally buy along the curve as it hasn't had the same bounce as the Euribors, but today its barely moving so unless anything else changes looks like it will be easier to find the opportunities next week.
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