Maybe there are other reasons for my below par performance!

Yeah I'm dipping my big toe into oil spreads.

This'll be fun!


Brent Crude

WTI

 

 

Gas

 

Lee

Month end. Time for Perspective.

 

 

To coin a sporting phrase the Championship is never won in January (Unless you're a tennis fan) but it can sure be lost! So its important to build a solid foundation in the first month of the year & grow in confidence from then on. Many things happen over this period. Fresh enthusiasm can lead to trigger happy investors forgetting about value & timing.  For example...I've never been more prepared for a year than this     And so bloody wrong. I guess thats why I'm who I am and why Bill Gross is Pimco!

See I was blinded by the whole Taper thing and the great Bond bubble. Watching the Treasuries rally in the first week of Jan excited me no end. I couldn't wait to get back from holiday and start putting on steepeners.

I do remember reading articles last summer by Jesse @TheBubbleBubble(Enjoying his finest hour right now) about the impact of reduction in QE on emerging market currencies. I bored my wife about it and everyone else who cared to listen(or pretend...sorry mum). Especially the people singing the praises of the great british recovery. Yet I still ignore it and started putting on the old "risk on" trades. Its a testament to my risk, money & me managment skills that with a day and a half left of the month I'm gonna actually finish up PnL. 

 

Its clear to see that the Emerging markets are this years Cyprus/Greece/Euro/USbanking Gray Swan event. Yes its grey not black. Black Swan events are the unpredictable ones far less frequent than grey and almost impossible to anticipate. Most of the recent events as bad as their impact was or is, could've been predicted and prevented but for the frail human emotions of fear & greed.

So we're all EM traders now. Bring on the Hungarian Florint! I might even start looking at my old favorite the Malaysian Ringgit!

 

Who Am I trying to kid? This year as with all years, I will fade the bad news then fade the good news. I've learnt my lesson trying to trade with the theme.

 

That peskey Bund keeps making new highs which means I need to look at my Daily continuation chart to find resistences to the momentum.

Anecdotally there is has been congestion around this 143.05 to 143.30 area. So whilst all news has been factored in for now this appears a nice place to rest - around my 0.618fib area. Above here we have 143.44 to 85. On the downside 142.90 break could see some longs reducing into month end but I'd be suprised if we see a break below 142.50. 

 

 

Bund Daily Continuation

 

 

bund 30min

 

 

€ curve

Trend is your friend. Well this late in the month I wont be selling any of these spreads till they are much higher. That is however, where I see the opportunities for the coming months. Sell the spread rallies. With one eye on EM currencies & equity indices for the change in big picture sentiment.

 

€ Teds

Refreshingly range bound during this current crisis period. I'm sure it wont be long till Europes banks strange fixings & LTRO conditions take precedent. Last year  we saw the long slow up move in Euribor over bonds as the overall trend. Quite clearly that has been turned over. Likely to find shorting rallies as best risk reward until further notice.

 

 

 

Euribor spreads

Eurodollar Spreads

 

Laters

Lee

 

 

 

28/01/2014

Well hello.

Bund 30 min, 3 to 4 day consolidation period in full swing. Ties up nicely with tomorrow nights FOMC. We are currently sitting in the middle of range although short term momentum has turned slightly bearish.

 Bund 240min

TYA 30min

 

Turkish Central bank announced am emergency meeting for midnight tonight. This took the wind out of the FTQ bund bid pretty much instantly yesterday.....We were looking a bit lethargic in our assent and with FOMC likely to do a further $10bln taper tomorrow night this seemed a decent time for taking profit (NOT IN MY CASE(pretty much avoided that position this year so far!)).

With this up move stalling the curve spreads in € bonds are showing signs of minor correction. Could possibly dip toe in here, certainly an obvious cheap stop to be had.

€curve

$curve

These are very mid range, sit on hands for me.

 

 

€Teds

Reflecting the directional sentiment of bunds....Small rest from the weakening bor over bond spread.

 

 

Eyes on UK GDP today.

Gilts

 

Good luck

Lee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16/01/2014

Good morning all,

Better than expected Empire manufacturing & an impressive performance from the European equity indices saw bonds make new lows on the week yesterday.
The shortend still a touch weak keeping pace with 10s in the down move. Higher fix than expected yesterday, banks are paying back larger quantities  of the LTRO so we are witnessing a draining of the excess liquidity. This is weighing heavily on the Short end. It was the 17th of Jan last year that witnessed quite a huge sell off in Euribor from a similar concern. Mustn't fear! ECB members are not shy in reminding us that they have tools at their disposal to ensure we do not get an explosion of short rates. Problem is, if they come in the form of new a LTRO/MRO type thing the conditions for acceptance may be too prohibitive for those that need it.

Well a data splattered Thursday and with my waters muddied, I'm maintaining a small and changeable approach to the markets again....Probably for the rest of the month TBH.

tya

I expect the Bunds to come in largely unchanged from last nights close. Lower high & lower low puts the momentum to the downside although we did have a nice bounce from the 37/40 level back into mid range. Which only goes to serve my lack of any real directional certainty.

 

 

€ curve still bumbling along the bottom of its range despite the small turn down in tens. Mainly thanks to the stuff highlighted above I think. No fireworks from the Bobl auction.

 

 

 

Good luck

Lee

15/01/2014

Good afternoon all,

Thanks to C2C rail I had to get the underground this morning which added 30 mins to my journey (That started 20 minutes later than normal!) So a Pre Eurex open post was never gonna happen.
Mustn't grumble as it doesn't happen often.

Right back to business.

Slow start yesterday where any attempt by the long end for new highs were to be hampered by the continual reduction in bank take up of ECB operations thats going on. This weighed heavily on the short end causing bear flattening to occur.
It took Fed speakers to really help the Long end to catch up. Plosser and Fisher both relaying the sentiment that they'd like QE finished sooner rather than later. Whilst Plosser stated that last weeks Non Farm release disappointment should not affect Taper.

Bunds
Looked heavy into yesterdays close, but as the data releases yesterday never got anyone excited so its sideways to a lower for me.
140.91 the first upside target if we to try higher, I'm looking at ~37/40 as first downside target.

€ curve, If we can get some momentum in the bund to the downside we could see a decent amount of curve steepening. Bobl auction to watch out for today could be a short term infuence.

My bias for curve steepen is currently being hindered by the weakness in the short end. So I'm Treading lightly. No one ever made their year in January!

 

 

 

Good luck.

 

 

 

 

 

 

Happy new year.....Eventually

Good morning all,

Lots happened since my last post. We've begun the taper. Large steepeners over the holiday period have given way to flatteners as non farm disappoints & Fomc minutes never threw up any shocks.  ECB reinforced the more accomadative stance, plenty of tools on the table if needed.

I haven't watched the markets a great deal the past fortnight so I'll be treading lightly until I get my eye in on how these markets are taking the data. Having said this, I am a tad surprised at the the amount of follow through in bonds yesterday post Non farm disappointment. I guess there were more unhappy & weak shorts in place than I expected.


TY

I expect the bunds to open a Little off from yesterday close based on the US tens overnight. All eyes will be on the UK data this AM. Currently I have the bunds pretty much in no mans land. Short term momentum has me seeing a 141 handle as an easy early target. I do see 140.60 to 40 as a good area for consolidation and range trading if the upward momentum runs outs of steam.

€ curve

With the up move in long end the past couple of days we have seen quite the curve flattening. I suspect the move has been a tad too sharp and would look for some pull back and consolidation before the next move.

Plenty of data out all week so I'll stick to light and changeable for now.

 

Be lucky

Lee