- Both US10YY and EU10YY trading above yield resistance levels now. US10YY at 3.61% (R3.57%) and EU10YY at 3.47% (R3.44%). EU10YY is pointing at 3.67%. US10YY break of 3.70% = 4.01% target.
- Overall bearish Rates markets. Yields are going up, with central banks in the early stages of normalizing short rates. Some way to go yet.
- The Fed is behind the curve. Bernanke's strategy of "hoping" inflation is transitory will be punished by markets. Already USDX is in deep shit territory with no end in sight.
- I am positioned in the wrong part of the curve. Need to go short ED further out instead of EDZ1. Problem is .. the back end has already run a long way away from me. Need to wait for better entry levels. Negative carry is prohibitive at the moment. Short EDZ1 is running against long spreaders. Should really have been watching this more closely earlier. Too many things to look at.
5 comments:
Besides the long spreaders, the white packs may also be affected by the FDIC ruling. I have some old material since the start of this week on some thoughts of the FDIC thingy. Let me know if you want it. The repos are still trading special and the dealers record low in short end bill holdings. (CT3 trades -2% on 1mth repo) Sidetrack a little, if you extend out and look at the EDZ1/Z2/Z3 bfly, it steepens massively into Fed rate hike (Jun04) and flattens back subsequently. I wonder if this is the start to such a setup.
Yes please. Need all the help I can get. Send to my email? Thanks :)
I generally like to keep things very simple and will not go beyond simple calendar spreads. I always thing that butterfly spreads,etc were invented by brokers to generate more brokerage.
Haha... you are probably right. But you have other markets to explore into... when if stuck in just one market, one will have to look harder into it to get the interest going... haha...
Cool. Will come to you if I need to delve deeper into any Rates issue. Always good to have a specialist around whom one can turn to.
Read thru the FDIC stuff you sent me. Very clear explanations. Thanks.
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