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peat
10-06-2008, 06:00 PM
Anyone else looking at the bond market tradeables?

Using the abnamro market index platform (trial) which runs on the Oanda engine I've got a short here in US-TBonds since 21 May.

All this talk of inflation will drive bonds down perhaps. Certainly seems like a new trendline (Red) is forming after the break of the old green one. Currently up nearly 300 demo pips :rolleyes:. Having a position certainly assists familiarizing oneself with a market I reckon.
I'm going to leave the stop where it is now at break even and move the take further down.


Theres a few other interest market instruments in the platform such as US T-Notes, Bunds, and Bobls.

Steve
11-06-2008, 07:51 PM
How has the bond trading going?

I was unaware that these were available.

peat
11-06-2008, 09:58 PM
+330 now. did what i said with tp moved down. this is a long term trade.

Halebop
11-06-2008, 11:23 PM
Inflation looks on the verge of being out of control to me. If you can handle the volatility, I think a medium+ trade should do OK. The negative is lots of Macro factors beyond the ability safely analyse or forecast - for instance if we head in recession without much inflation, those bonds will become a safe haven rather than an overpriced security.

Good luck!

peat
12-06-2008, 09:05 AM
ABN Amro comment today


The ECB's heavy hint it would hike its refinancing rate at its next meeting in July caused a
dramatic re-pricing of short-term interest rates in the euro area (see page 2). For much of
the past six months, markets had been betting the ECB would be forced to follow the Fed's
aggressive policy easing. But I think the ECB has now turned the correlation between US
and European interest rates on its head. Instead of the Fed leading the monetary policy
cycle, I think the ECB has now assumed leadership. If the ECB hikes in July (and again in
October), I'd expect the euro to strengthen. The corresponding fall in the dollar, with its
impact on US inflation prospects, might force the Fed to consider tightening later this year.
Markets are discounting significant rate hikes in the US and even the UK.
Unsurprisingly, the shift in short-rate expectations has also had an impact on long-term
interest rates. Bond yields have risen significantly from their lows earlier this year. Still, I
think there is scope for yields to rise much further, particularly in the US. There are three
reasons. First, real yields are still too low. At the height of the credit crisis, US 10-year real
yields fell to just 1%. Since then, yields have risen to around 1½%. In spite of recent inflation
worries, this rise in real yields is the principal explanation for higher US Treasury yields. Yet,
even if the US's long-term real growth rate has fallen to 2½%, this would suggest real yields
have further to rise. Over the cycle, I'd expect real yields to average at least 2½%. If the
economy stabilizes, then real yields should continue to rise.
Second, bond markets are still too sanguine on inflation expectations. While implied
breakeven inflation rates have drifted up, they are still low in the context of current headline
inflation rates and the dramatic spike in household inflation expectations. It seems to me that
bond markets are implicitly assuming that central banks will be successful in curbing
inflation in the medium term. I'm reasonably happy to make this assumption about the ECB
but I'm more sceptical about the Fed. While Mr Bernanke has become notably more hawkish
in recent weeks, I'm not convinced the Fed will be willing to tighten policy aggressively in the
short term. This scepticism also informs my third concern about bond markets. The term
premium is still too low. While risk premiums have risen in many other asset classes,
government bonds have been relatively untouched. With weak growth and rising inflation, I
think bonds should price in a greater risk of a policy error.

peat
25-06-2008, 10:40 PM
added short US T-bond at 114.99 (demo)

peat
14-01-2009, 06:25 AM
bump this thread for Dr Who

how does one take advantage of falling bond prices? one sells bonds!

T-Bonds... T-notes, Bunds , Bobls , are the instruments available in the ABN Amro Market Index platform (now being run by Royal Bank of SCotland)

peat
31-01-2009, 08:19 AM
interesting article focussing largely on bonds here

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10554405

interesting to note too that another article in the Herald is espousing the virtues of corporate bonds as a way of counteracting the falling interest rates on offer and yet this article shows that higher yield bonds often dont participate in the capital gain associated with a flight to quality climate. "Higher-risk bonds often morph into shares at the first sign of trouble and drop in price"

selling US T-bonds on the 13th Jan has now yielded 800 pips.

Dr_Who
02-02-2009, 04:14 PM
Do you think the world will continue to buy US debt?

There must come a time when the world will say enough is enough and not buy US debt.

peat
02-02-2009, 06:03 PM
In the past it has been argued that China will protect its already massive investment in USD by continuing to support the US Treasuries market. ;)
The argument was the two economies were symbiotically linked with a circular flow of money. Wanna buy my widgets? Sure , will you lend me the money?

It will be interesting to see how this pans out in the new contractionary environment.

Dr_Who
03-02-2009, 09:12 AM
China and the rest of the world will only support the US for so long before they run out of cash. China is also contracting at a fast rate and will need cash themselves to pump up their own economy.

I see further downside to the US economy as the world stops buying US debt. This is a very serious problem.

arco
03-02-2009, 12:55 PM
US can borrow money off China maybe

peat
05-02-2009, 01:18 PM
selling US T-bonds on the 13th Jan has now yielded 800 pips.

closed this (demo trade) out for about 900 pips

peat
25-03-2010, 09:40 AM
big down day on US T Bonds last night... so interest rates are heading up as people get spooked about the amount of debt needing to be financed