I'm starting to (day)trade this spread. I have some ideas but was wondering what the veterans do (things to look for, any tips). Also the ratio on the 5-10 is 2 to 3(contracts) what would it be for the 2yr.-5yr(and does anybody trade that spread)? Thanks for any help.
Most two year locals on the floor trade the TUF (2yr vs. 5yr) extensively. It is usually weighted one to one, sometimes just barely a few more two years.
Some of the biggest curve locals are NOB traders. It is usually traded on a 1.66 to 1 weighting ten years to the bond. I have never really watched it overnight, but since it includes the ten year more often than not it has some strange moves because of the amount of paper in the ten year. Really tough to give tips on it, either you try to leg it better like everyone else on Autospreader or trade it more long-term directionally.