Let’s revisit the UK term structure for just a moment.
Early June we advised that clients were to look own this spread, that course-of-least resistance was to be wider over the intermediate term. The spread 2-30 for example was 277 at that writing (6/12). We noted that there was no hurry, but that the aim should be to acquire a position ongoing, and that 270 was a reasonable entry point. The E-Z panic of 6/26, 27 afforded that print and clients were in some fashion to be long from that juncture.
The spread expanded satisfactorily, printing 285 +/-, July 5, assisted by the announcement of further Bk of England foraging. This is why we noted that owning this spread was not simply a directional exercise. Indeed, the short end improved substantially.
Following, the spread has come back in, last 269. The overall plan remains the same. Gather a long position, or, set other trades but with this background in mind. The total collapse of the Euro might prove corrosive to the strategy but that’s a ways off yet. The rest in priced in.
Robert Craven
Early June we advised that clients were to look own this spread, that course-of-least resistance was to be wider over the intermediate term. The spread 2-30 for example was 277 at that writing (6/12). We noted that there was no hurry, but that the aim should be to acquire a position ongoing, and that 270 was a reasonable entry point. The E-Z panic of 6/26, 27 afforded that print and clients were in some fashion to be long from that juncture.
The spread expanded satisfactorily, printing 285 +/-, July 5, assisted by the announcement of further Bk of England foraging. This is why we noted that owning this spread was not simply a directional exercise. Indeed, the short end improved substantially.
Following, the spread has come back in, last 269. The overall plan remains the same. Gather a long position, or, set other trades but with this background in mind. The total collapse of the Euro might prove corrosive to the strategy but that’s a ways off yet. The rest in priced in.
Robert Craven
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