28/03/2014

tya 30min

Yesterdays hi is not far away so we could still reach 124.08 area today. Bunds failed to break beyond current contract hi. Made a good attempt in the morning but it was up to the short end to drive prices higher in the afternoon. Lots of talk of large Schatz buyer against US 2s. Skewed the curve a little into the close.....Is there someone out there who knows what Draghi is going to do in next weeks ECB meet?????
Bund 30min

Trend is your friend, can we stick around these levels and build a strong support base before breaking through 1.5%?
Plenty of data out this morning in Europe consumer confidence, economic sentiment & cpis. UK GDP could be a big influence. Yesterdays very strong UK retail sales was shrugged off after an initial spate of selling in the gilts the market turned higher.

€ curves
The late afternoon Schatz buying saw an uptick in curve spreads. The short term trend lower in line with the longer term lower trend means we have an opportunity to fade and sell Schatz v Bund & Schatz v Bobl. Providing the bund stays above 143.45/50 area this is a decent trade, would be more encouraging if we can see an early break up in the bunds past 144.00.

 

€ teds...Broken record, Schatz strength weighing on teds, I see that a long end rally would negate this in terms of curve. For the teds tho I don't see this as happening so I'm reluctant to fade the down move in Schatz ted. If the long end goes higher it will drag the Schatz higher not so sure the front Euribor will keep pace. Boblteds continue to behave nicely, although very tough to get filled as your competing with piggy backing algo Market makers(LOL, market makers)

Good Luck