Both the ECB and BoE were very dovish today to pretty much undo all the moves from the hawkish FED 2 weeks ago. The move upwards in both Euribor and Short Sterling was big, with short sterling pushing up some 10-20 ticks from lows across the curve and some curve flattening as you would expect. I was playing the back end of the curve more as despite the move it held up pretty well, and I took this opportunity to sell as much as i could in this spread, namely jun15sep15 and Sep15Dec15, and luckily it then came off nicely to book some nice profit.
On the Euribor front, we had a similar move, with a 40 tick move up on the back Euribor months as Draghi maintained that the ECB will continue to keep rates low for an extended period of time, and that they will remain accommodative for as long as needed. Again like short sterling, the Euribor curve went up in unison on the initial comments which gave some good opportunities to short the Spread, and later on they came off which gave some good profit potential. The volatility was immense so keeping the trading sizes small was the key as it was very easy to get it wrong. In fact I was initially caught short on the big move up and lost a bit but managed to make it back from after.
Tomorrow is Non Farm Payrolls, and this will be a big mover especially for Bonds as a good number would put the FED on notice for possible Tapering.
Below is my trade composition for the day:
Tomorrow is Non Farm Payrolls, and this will be a big mover especially for Bonds as a good number would put the FED on notice for possible Tapering.
Below is my trade composition for the day:
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