Bund Futures posts new Highs

So after the big (overdue) sell off in equities, the market piled in the safe haven securities again as the Bund broke 139s and is heading towards 140. What was notable was the volume was much greater yesterday suggesting there could be further to come.
This in turn has lead to falling spreads, and my longs from yesterday were in trouble yesterday afternoon. Being long Mar13Jun13 6.5, the spread quickly fell to 6s, and then were trading small 5.5s, I managed to get long Jun13sep13 at 6.5 and took half tick on that to then take myself out at 6s on Mar13Jun13 and I'm glad I did too as this is now trading 5/5.5s. Normally I would look to buy around there but with the four day weekend coming up, I will wait till tuesday to see if its still there. Dec13sep13 fell also bought more at 8s and got out at 8.5s.
Its often the case when it looks like its a daft idea going long as spreads are going down that we then get the big reversal which has proved to be the case twice in the past month already, so unless anything significantly changes I will still look to go long at these levels.
Below is some video analysis of the moves in these spreads:


Have a happy easter!

FED minutes show no signs of further Stimulas

Yesterday evening we had the fed minutes out, and there wasn't evidence of further stimulus, which in turn led to a sell off in bonds. Bunds fell from 138.40s to as low as 137.60, on the news and as you would expect the yield curve steepened.
The dollar gained alot of strength as you would expect to, as we saw big sell of in dollar pairs, notably the Euro dropping 160 pips +.
Having been long the Euribor spread from earlier, this provided the perfect opportunity to get out, looking back wish I bought more earlier.
However Bunds have fully retraced the move and the spreads have all come back again. I have tentatively gone long a small amount in Mar13Jun13 at 6.5 and Dec13Sep13 at 8.5, but with the ECB rate meeting later on today won be doing much more other then that. Hopefully there is an opportunity to get out before then. It seems now that the front end of the curve is much more bid then the back end, so hopefully that fact will help the front end spread move up.

Euribor Spreads holding Steady

After the retrace in the Bunds, and retrace in Euribor spreads, it seems for now that we are holding steady around these spread levels. We are trading 7/7.5s Jun13Sep13 as I write and 9/9.5 in Sep13Dec13. These spreads have all fallen as you would expect from the lofty highs two weeks ago as the Bund has retraced its 300 tick move downwards. On top of this Stocks seem to have found value to as we trade in a smallish range.
Looking ahead with 7s holding well yesterday in Jun13Sep13 and 8/8.5 being the last point of support for the sep13dec13, I'm inclined to go long around here. In fact as i write i long small 7s in Jun13sep13 and long 9.5s Sep13dec13. Unless anything changes fundamentally in the next few days I expect these levels to hold up, hopefully for a small retrace back to 7.5s/8s in Jun13Sep13.
With a four day weekend coming up it could be more quieter then usual as we approach the end of the week, but tuesdays open could be very lively as we are still going to have the release of Non Farm payrolls on Friday although most markets are shut. Should be fun!

Bonds Retrace

After the huge sell off in bonds we have got some significant retracemnt with the Bund close to touching 138 again. So much for that, spreads have come off as you would expect but are still not where they were pre sell off. However there is more of a range in these Bors which is good, although Volume has been getting worse. Although it was dangerous shorting the spreads finally paid off, but I think here we have to be careful, we are in the middle of the whole move on many of the 3 month spreads, so trying to look at the Bund and the 2s 10s spread to give guidance as to which way the spreads mite go.
The week in general however has been pretty quiet so not much else to report.Hopefully we get some more volume again next week!

WorldSpreads 13 million Blackhole

So another firm doing some client money swindling. Apparently a 13million black hold in the accounts of world spreads out of a pool of almost 30 million. This mind you is another FSA regulated firm. So it begs the question, what does FSA regulated really mean? Well it means whether you with a dodgy broker in some offshore island, or a FSA regulated UK company, your money is not safe, and no guarantees can be made that you will see it all when you want it back. If this news isn't bad enough, the news that KPMG has been appointed auditors is a double whammy and it is likely that they will not see there money for months.

Below is the full article from the independent:

Customers of a spread betting firm are likely to be left seeking compensation after an estimated £13 million black hole in its accounts was revealed today.

WorldSpreads, which runs online and telephone trading services, was placed into administration over the weekend after "accounting irregularities" were found.

Administrators at KPMG said the group's 15,000 customers were owed £29.7 million but the group has only £16.6 million of cash, leaving them facing a large shortfall.

However, customers may be reimbursed up to £50,000 by the industry's Financial Services Compensation Scheme, depending on their circumstances.

On Wednesday, chief executive and co-founder Conor Foley resigned, two weeks after chief financial officer Niall O'Kelly stepped down following a profits warning.

Its shares were suspended from trading on the Alternative Investment Market on Friday.

Redundancies among the firm's 66 staff - most of whom are based in London - are likely as administrators wind down the business. WorldSpreads is based in London and its parent company is in Dublin.

The Financial Times reported that WorldSpreads mixed money from customers' accounts, which should have been segregated, with its own funds.

The industry's compensation scheme pays up to £50,000, mainly for individuals and small firms. But some of its clients, including other spread betting firms, are believed to be owed larger sums, raising the prospect of a lengthy legal struggle.

The Financial Services Authority said: "Clients should be aware that any shortfall in the client money accounts will impact the amount of money that can be returned."

Bond Yield Curves Steepen

What a big week for the bond markets, as we have sold of close to 400 ticks in the Bund, moved up big in the 2s 10s spreads, and have seen big moves up in the Euribor spreads as well as other STIR spreads. Is the market getting a bit ahead of it self? In my opinion yes, but that doesn't change what's happening right now, and my strategy to keep shorting into the rising spreads is proving to be alot of hard work.But this is generally the correct strategy so will continue doing it and scratching if need be.
Going forward, its likely that we are going to keep going up in stocks, as there doesn't seem much in its way, and bonds are likely to stay lower for now, with yields jumping way above 2%, as long as data keeps coming in strong.
Below is some video analysis of the weeks moves:

Mad Euribor open

Who ever trades the short end would have seen today the mental open in the Euribor. We opened up and had 9k lots push the euribor down 10 prices in one swoop before it retraced. Ended up being a brutal day for me as I got filled all my longs and had to scramble to spread it all up at very bad prices. Ended up short over 60 lots and managed to reduce the loss to 1/2 tick which wasn't as bad considering I was down over 2 fat ticks at one point. The reason I presume is some repositioning or dumping of positions after the more upbeat FOMC statement yesterday.
As bad as it was maybe this could be the start of some volatility in the Short end. Volumes are way up almost 4 times more then usual at this time of the day.
We seem to have stabilised now but will be watching closely which way these spreads go when the US opens, I still favour shorts, because regardless of the more upbeat statement there is no sign of rate rises in the short to medium term so think these spreads will come back down again.
We may also get more ensuing volatility from the futures and options expiries this week so bear this in mind.