The big event last week ended up in a somewhat surprise, with the FED tapering finally, after a raft of good news suggesting this was the best thing to do. Stocks rallied as Bernanke re iterated that rates will remain low, and Tapering will only be gradually done, and that they would increase QE if the economy warrants it.
The reaction was surprising, not because it went up, but the way it went up, the rally was like there was a 2 hour Sale in stocks, and its was getting bought up like there was no tomorrow. This rally continued through Friday, and today it looks like we going up again. The DAX has been on steroids, with the index hitting new all time highs, and rallying over 5% from the level on Monday last week.
One thing that has reacted normally is the gradual rising in Spreads, Eurodollar and Euribor have seen a gradual steepening, however Short Sterling, front end is steepening very quickly, and has caught me off guard.
The Dec14Mar15 Spread has gone from 12 pre taper to 17/18. Clearly futures are pricing in a 2014 rate rise, but for my sake I hope we get some sort of a pullback soon, as Short Sterling Spreads have risen much more then Euribor and Eurodollar in the front end.
Looking forward, its likely that we are going to continue to rally in Stocks, and see some exaggerated moves in other futures contracts as volume is super light as you would expect. I will be keeping an eye on the market but wont be trading much, and instead take some time off and prepare for what I hope is a good 2014.
In general, this year has been OK, there has been times of nice volatility coupled with times of utter boredom. I hope next year there will be some more volume in the markets, as it seems the back end of this year has been very quiet. Also with the introduction to the new Nasdaq NLX market, it will be interesting to see how the Euribor and Short Sterling contracts trade on there, as they are getting a bit more market share.
Could be some good opps looking at both exchanges.
The reaction was surprising, not because it went up, but the way it went up, the rally was like there was a 2 hour Sale in stocks, and its was getting bought up like there was no tomorrow. This rally continued through Friday, and today it looks like we going up again. The DAX has been on steroids, with the index hitting new all time highs, and rallying over 5% from the level on Monday last week.
One thing that has reacted normally is the gradual rising in Spreads, Eurodollar and Euribor have seen a gradual steepening, however Short Sterling, front end is steepening very quickly, and has caught me off guard.
The Dec14Mar15 Spread has gone from 12 pre taper to 17/18. Clearly futures are pricing in a 2014 rate rise, but for my sake I hope we get some sort of a pullback soon, as Short Sterling Spreads have risen much more then Euribor and Eurodollar in the front end.
Looking forward, its likely that we are going to continue to rally in Stocks, and see some exaggerated moves in other futures contracts as volume is super light as you would expect. I will be keeping an eye on the market but wont be trading much, and instead take some time off and prepare for what I hope is a good 2014.
In general, this year has been OK, there has been times of nice volatility coupled with times of utter boredom. I hope next year there will be some more volume in the markets, as it seems the back end of this year has been very quiet. Also with the introduction to the new Nasdaq NLX market, it will be interesting to see how the Euribor and Short Sterling contracts trade on there, as they are getting a bit more market share.
Could be some good opps looking at both exchanges.
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