- UK 1Q GDP weakish at +0.5% qoq / +1.8% yoy but slightly > expected. Short sterling contracts a bit weaker across.
- FSSZ1 @ 1.21% now vs 3mth Libor @ 0.82%
- Monthly : Still positive.
- Weekly : Possibility of topping action in progress.
- Daily : IF we close today around current levels, it's a confirmed reversal of the uptrend; will negatively impact on the higher time frames.
- Shorting FSS is probably a better hedge for short USD positions than shorting ED.
- Follow up on Euribor post about missing a good trade.
- 3mth GBP Libor = 0.82%. FSSZ1 (98.57) = 1.43% ie pricing in Libor increase of 61 bp. Current Base Rate at 0.50% (since 05Mar09). Current Libor is already steep relative to Base Rate. In other words, quite a lot being priced into curve so is clearly NOT a no brainer trade.
- Chart likewise. Monthly looks like it has turned down, but at current price, is not a compelling sell level. Weekly and daily says nothing to me.
- BOE should be next major central bank to hike rates so there is a trade in here somewhere. Just that large negative convergence to Libor makes timing this correctly more important than usual.
- Trade : Reckon it does not make sense to sell too far below 98.76 (chart). On the other hand, do not think we will get a chance to sell too near 98.76. Tricky balance. Have to be very patient with this.
