Interesting to note that the 1 yr 2 yr portion of the curve has remained inverted all week--EDZ to EDH roll will only affect marginally because curve is so flat (EDZ expiring Monday morning)--fed should take notice at FOMC meeting--i like to bring this up at cocktail parties when i don't want to talk to someone any more.
lol bix...I like the last line...I usually start talking this way aswell when confronted with people who "just got a hot tip from their stock broker" about the market.. imo the fed will only go 25 (wow I'm on a limb here eh?)...and will probably not change much in their little statement afterward...not too much has changed since last we met and the Fed does not like to surprise...as such ED and the rest of the bond markets will probably close for the holidays...or at least I will...lol.
Wow, looks like the year is over for the interest rate markets. Pretty non-eventful after the FOMC. Volatility came off in the ten year at least after the statement was released. Some big mortgage guys started to get out of some of their lower strike puts in the Mar (108), only around 5k or so. Looks like the curve flattener is still gonna be a good trade for awhile here. Fed is showing no signs of concern with inflation but will continue to raise 25bps the next few meetings. If CPI comes out as expected or lower than expected we'll probably be treading water till the end of the year. I hope Greenspan and the gang are wrong, we'll see.
The language left it open ended and sounded identical to last 1/4 raise meeting, but I think internally they hope the bond market will do the job for them of not having to raise again in the next couple of meetings unless the economy really heats up, in which case the Bond market (FFF) will force their hand once again. 4% GDP is a pretty healthy economic environment. But the way the ZN reacted today, I think the bond market is predicting that rates may not be going higher here for a while, inspite of all the expert opinion. Technically rates look much higher to me (ZN), but the action today was really surprising. Of course, the longer end of the YC reacts to different things than the FFFs, but even then the shape of the curve sure looks like it is saying we will be slowing down alot in the comming months. nitro
the fed's statement was only one word different than the last..."gradually"...applied to the improvement of the labour market...I guess we wait for the Jan.7th non-farm before we see any real movement...after the annoucement the flattener trade continued and there doesn't seem to be anything until nfp that is likely to change that view...cpi may be interesting, but I think alot of institutional traders are now trading to protect their year end bonus than anything else...so bye bye volatility...hello ski hill...lol
All you guys seem to know a lot about spreads. Does anyone trade butterflies. If you do can you please give me an example of one and what I should be looking for. Looked around for information regarding spreads on ED, can't find any. Thanks
Hi all, I'm curious about something that I hope you'll be able to offer insight into. I have a set (5) of EDH5-EDZ5 spreads on. Most of the day, the spread was moving against me (I'm short,so the spread was moving against me by increasing). But, at about 2:55 eastern time this afternoon, the spread reversed rather drastically (went from 6.95 to 6.70), after not moving much the whole day. Also, the volume was rather erratic. At the same time, the treasury notes and bonds weren't moving at all, and the stock indices were rather dull. Also, I couldn't see any news that would be an impetus. I'm glad I didn't close the trade out during the day--noticed a few days ago that these spreads seem to bounce around during the day, but then settle down for the late afternoon (so I stick to end-of-day data and analyses to keep from getting whipsawed). Any idea why such a large move all of a sudden? Also, any comments on adjusting ED spreads during the day vs. only adjusting at the end of the day? Thank you!