Although most strategy is conveyed through our private consultancy, we do highlight a trade from time to time in this blog for purpose of illustration.
The relative dynamics, US / Ger, often provide opportunity. In the June/9 blog we recommended that the US 10 yr leg be sold to the Bund (2.99% / 3.03%). In the blog of July/8 we recommended an exit (3.07% / 2.86%) because of the weak NFP print. This spread was inspired by relative, real sector developments; we did not work quality flight into the equation.
Next, clients were urged to again sell the US leg to Germany on Aug/8 (2.25% / 2.33%). Last (1.92% / 1.75%). That trade was inspired by both real sector developments, plus what we expected to be an intense flight to sanctuary into the Bund. We no longer have a view regarding this relationship. We have recommended that our clients consider exiting this trade. Others may wish to do likewise.
Robert Craven
The relative dynamics, US / Ger, often provide opportunity. In the June/9 blog we recommended that the US 10 yr leg be sold to the Bund (2.99% / 3.03%). In the blog of July/8 we recommended an exit (3.07% / 2.86%) because of the weak NFP print. This spread was inspired by relative, real sector developments; we did not work quality flight into the equation.
Next, clients were urged to again sell the US leg to Germany on Aug/8 (2.25% / 2.33%). Last (1.92% / 1.75%). That trade was inspired by both real sector developments, plus what we expected to be an intense flight to sanctuary into the Bund. We no longer have a view regarding this relationship. We have recommended that our clients consider exiting this trade. Others may wish to do likewise.
Robert Craven
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