Markets await for the ECB

So after pretty much treading sideways for the past week, there is much speculation that there will be a negative deposit rate announced by the ECB on Thursday. On top of that there is talk of a 4 year LTRO, so with all of this and the Bund trading between 146-147, alot of this seems to be priced in so anything short of this could be a great opportunity to get long the Spreads as the knee jerk reaction should be a steepening of the curve. I would be looking at playing it through Euribors and playing the 6 month spreads onwards to really try capture some yield movement.
There has not been much to write about over the past week as volumes have been very low amid this low volatility environment.
Equities have grinded up higher day after day, with any kind of small pullback met buy a barrage of buyers desperate to get in. Shorters are shying away because they have been hit pretty much every time it seems there mite be some momentum to the downside. For a day trader these markets are very tough, cause we live of volatility and without it I've inadvertently turned into a position trader, with alot of my trades taking days if not weeks to get out of! And while interest rates remain low and yield chasing continues, amid the record levels of cash amongst wealthy investors, I can only see this market continue to grind up with any sell of not lasting long. In my opinion the market isn't being priced based on the economy, its just merely supply and demand. With little yield available else where Stocks and property will be the way to go.

Yields come back after Sell off

Last week was a pretty big week for Yields as they reached very low levels in the Euribor curve and the flattest I've seen it on the back of negative rate talk. I took the opportunity to get long and I was very long having averaged in 5 prices or so, and the much needed pullback arrived slowly but surely which gave me overall a scratch I would say, but in hindsight this was a good trade, but I got out too much of my position too early. June's ECB rate meeting is likely to be a busy one with Draghi pretty much saying there is going to be further easing in this meeting. With poor PMIs from European nations it seems that some form of easing will be on the cards, whether it be a rate cut or QE remains to be seen.

This week has been very quiet and today has been one of the quietest days I've seen in a long while, with the UK and US shut on Monday volumes have been very light. There hasn't been much to do and its a matter of churning out what ever you can and waiting for hopefully some volatility to return to these markets.

Complacency seems to be rife with the VIX at 11.65 and the VXX at 35, sellers don't seem a match for the buyers as large Cash pools within companies and on the sidelines will just keep this Stock Market going higher and higher, and so at the moment it seems that any kind of correction will just be met with a barrage of buyers. Though the contrarian view would suggest that it is for this reason we will get some kind of correction, although it doesn't look likely given the current evidence.

Bond Yields dropping Big!

Bunds trading 146.17 as I write, didn't think I would see that level in a long time, but it seems that negative interest rates in the EU is a given now. The Yield curve has experienced some aggressive flattening, which is proving very difficult to trade.
Stupidly enough I've started to buy these Euribor Spreads, thinking that the Red and Green months spreads have already been hammered quite a bit were a bit over done so maybe we mite get a bounce, but this hasn't been the case, its literally been a one sided market, not a tick retrace to report, so at the moment quite underwater on my positions, but I've played it relatively small so hoping for some pullback. I'm long Jun16Sep16 at an average price of 8.5s and Mar16Jun16, at a price of 6.5, looking to put more on as it continues to go lower.
Below is the chart of of the Jun16Sep16 Euribor Spread, where we see a straight line down pretty much in the past week.

Not a pretty chart for a spread trader at all, but hoping we get some stabilization soon.
Short Sterling on the other hand has been pretty flat, with yesterdays inflation report signalling that rate rises will be gradual and there isn't any real hurry at the moment. The UK is at a totally different point to the EU, where rates are going in opposite directions, which makes you wonder what would have happened had the UK adopted the Euro.
Not much more data out this week so hoping for some stabilization soon!

Sideway choppy and difficult!

The last week has been some difficult conditions to trade, Volumes have been low in Bonds in general, Bonds and Stocks keep wanting to go up, hard to get any traction anywhere. Scalping equities seem to be the best play right now, keep buying on any dip and your golden, its worked for a year plus, but its the feeling when it comes off that this is the one where we pull back more then 2% that is a constant snag, but time and again I'm proven wrong. Right now I'm short the Dow and twice was 140 points onside before twice seeing that disappear within a day. In hindsite I should have taken the profit, but its that feeling that this will be the one, this rally can't last forever, but low and behold its the same thing all the time. Its likely now the bulls will just push this higher and i'll be stopped but I'm willing to take the loss given that one day I can really nail the short.
On the Euribor front, we have bounced off lows where we got as low as 2.5/3s in Jun15Sep15 which bounced as expected to 3.5s but since that move up we have had low volume sideways churning, and all eyes are on this afternoons BoE and ECB rate decisions. Although it's unlikely anything will happen with rates hopefully the associated commentary will lead to some opportunities. Banking on some movement here.
Going forward, there's not much else out for the rest of the week so its a matter of scalping what you can, and keep ticking over till some real opportunity comes.

Choppy Trade as Market Looks for Direction

So I have been away for the past couple of weeks, but having come back yesterday, it seems nothing has really changed, Euribor Spreads are trading roughly the same levels as they were a couple of weeks ago, maybe a bit higher, Bunds solidly over 144, and Stocks are having some whippy price action but with the bulls seeming to win the battle as always.

Yesterday there was an initial rally in Euribor Spreads which given the way they have been smacked back down every time they rally, I decided to short. I went Short 5s in Jun15Sep15, got some 6s and 6.5s in Sep15Dec15 and 8s in Dec15Mar16. I managed to get this pretty early as some of the German CPIs gave an offered tone to the Bonds. It was your normal wait but the Spreads all came down as expected and gave good for 1/2 a tick.
The price action was better then earlier in the month so hopefully this is a sign of some improvement.
Looking ahead we have FED rate decision tonight, so although it will most likely be you $10Bln taper its unlikely there wil be any other significant news but you never know so will be ready for anything. Lastly Friday we have NFP which is always a biggie. Hopefully some good opps over the next few days.

Dovish FED lifts Stocks

The FED was more dovish then their initial statement not mentioning Yellens remark that a 'considerable period' for the first rate rise and the end of QE is around '6 months'.
This boosted the market as the Nasdaq as up 70 points for the day, and Bonds traded higher  with Spreads coming down to previous lows. Its typical that the FED still holding this market like a premature baby not wanting to do anything that stops the Equities march higher and higher. It looks like at this rate the FED will never have the bottle to pull the trigger on rates and it will stay like this for years to come, as the new normal is this economy is what it is now.
I'm looking to buy Spreads this morning averaging if needs be but judging by the volume it looks like its going to be another hard grind.
At 12pm we have the BoE rate meeting, so hoping for some volatility off that, but its likely that Indices will continue its grind higher, and Bonds will be going higher also.

Stocks getting hosed after tepid NFP

So Friday was the perfect storm, a sub par NFP, then the predictable rally, (since they rally on everything these days), then the realisation that this Stock market has run up way too much, and the aggressive sell off, which has continued into today. The Nasdaq has given up 146 dollars in the past 2 sessions, which is some very aggressive selling, especially in some of these momentum stocks that have run up like crazy with some crazy valuations with Netflix, Amazon, Facebook being notable losers.

Bonds pushed up on the back of the idea of a longer period of easy policy as well as a potential QE from the ECB. Euribor Spreads came off aggressively back to the lower end of the range, which gave the opportunity to buy it all the way down. This morning gave further opportunities to load up some more, and I managed to go long 4s in Jun15Sep15 and long 6.5s in Dec15Mar16 and as has been the case over the past few times its been down to these level it had a small bounce for half tick, before making its way back down again. I will look to reload again tomorrow morning, if the spreads are still trading down there.
The best thing right now is to take small profits as any pop up is being met by selling so until the bias of the ECB changes, scalping is the best play.
Going forward the week is pretty light in terms of data, with the main event being the BoE rte decision on thursday, so until then its a matter of nicking ticks.