Earlier we advised readers to look for higher US rates and used the spread (S) US 10 yr to (L) German Bund as an example. We sold that spread at -4, that is, 2.99% on the US Note, 3.03% on the Bund. Last is +4, or 3.01 on the 10 yr and 2.97 on the Bund. Thus, the price is lower on the note (we were short), higher on the Bund (we were long).
Of course this is what institutions do all day long; they would be very pleased with this result.
Our purpose however is that of illustration for non-traders, folks who have something better to do
during the day yet have more than a passing interest in the direction of interest rates. You don’t have to sell the US vs Germany of course but it is worthwhile to know that US rates have just about bottomed.
Robert Craven
Of course this is what institutions do all day long; they would be very pleased with this result.
Our purpose however is that of illustration for non-traders, folks who have something better to do
during the day yet have more than a passing interest in the direction of interest rates. You don’t have to sell the US vs Germany of course but it is worthwhile to know that US rates have just about bottomed.
Robert Craven
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