There has been a 4 print in Mar15Jun15, 6s trading in Jun15Sep15, and we are seeing lower levels across the whole curve in the Euribor Space as Emerging market woes as well as poor ISM Manufacturing data out of the US put pressure on the Yield Curve. This in my opinion are giving good risk/reward longs in for some Spreads. I think the downside is limited mainly cause I cant see the ECB doing negative rates, but I will react should they decide to do so.
Im looking for longs across all the Spreads I trade, being cautious with size just in case I need to average in more.
Bunds are trading 144.20, and I must say I didn't see that coming, but with the 5% plus pullback in Equities so far this year, clearly the momentum hasn't followed from last year.
Question is whether this is the much awaited pullback or something more serious, personally I think its a pullback as last years rally was way over done, like an elastic band getting stretched too far and this is the inevitable snap back.
Short Sterling has been the most lively trade in the STIR space, selling the rallies in the spreads has worked well, as Mar15Jun15 now trading 18/19s while I was shorting 22s and 21s last week. Its an interesting level here, as a long mite be good for a short term bounce, but any sign of weakening in the UK economy given the worsening data out of the US might lead to a big shift down in these spreads, as they are at pretty lofty levels at the moment, pretty much pricing in some kind of rate hike end of this year to early next year at the latest.
Big few days ahead with ECB, BoE rate meetings as well as US NFP, so looking forward to some good action hopefully!
Im looking for longs across all the Spreads I trade, being cautious with size just in case I need to average in more.
Bunds are trading 144.20, and I must say I didn't see that coming, but with the 5% plus pullback in Equities so far this year, clearly the momentum hasn't followed from last year.
Question is whether this is the much awaited pullback or something more serious, personally I think its a pullback as last years rally was way over done, like an elastic band getting stretched too far and this is the inevitable snap back.
Short Sterling has been the most lively trade in the STIR space, selling the rallies in the spreads has worked well, as Mar15Jun15 now trading 18/19s while I was shorting 22s and 21s last week. Its an interesting level here, as a long mite be good for a short term bounce, but any sign of weakening in the UK economy given the worsening data out of the US might lead to a big shift down in these spreads, as they are at pretty lofty levels at the moment, pretty much pricing in some kind of rate hike end of this year to early next year at the latest.
Big few days ahead with ECB, BoE rate meetings as well as US NFP, so looking forward to some good action hopefully!
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