So you said you can trade the TED directly through futures or something.. instead of trading Ge and t-bills against each other separately.. how do you pulll that up in IB ?
They are implied spreads. Best executed through TT or CQG, not IB. Although IB might be able to do it, not completely sure. Here is a good video on the TED spread. <iframe width="420" height="315" src="//www.youtube.com/embed/mhTXNLwcpOk" frameborder="0" allowfullscreen></iframe>
Just was discussing this with my father... How are t-bills a measure of the willingness of the gov to lend... When they are an instrument of borrowing money. I'll watch. I'm reading/watching everything everyone is posting.. This place is something I am extremely grateful for... Haaplu thankgiving
QE? During a crisis the FED is "buying" securities or "lending" capital to the market. Or you could call it "providing liquidity". Pick your position. I should have said Fed vs gov't but same thing to me. In a panic, the "Fed" is essentially lowering rates while corporates are raising them. Hence the spread "widens".
So obviously you could say pic March Eurodollars against 3 month t-bill futures.. There is obviously different pricing through the term strucutre.. you pick say jan14 GE against jan14 GTB , whats the difference.. whats the term structure risk against the other term structure risk
There's a few differences... Firstly, the Jan14 t-bill matures in Jan2014, whereas the Jan14 ED contract settles to the 3m LIBOR fixing on 13Jan2014 (so the rate covers the 15Jan14-15Apr14 period). Secondly, there's a spread between the two markets. A decent, albeit imperfect, proxy for this is the difference between LIBOR and FF rates.
Fed Funds effective rate, in this case. Nah, it's sorta complicated when you're this close to home and it's hard to find Eurodollar contracts with sufficient granularity. The most natural futures to trade the t-bills against would be FedFunds, as they lend themselves much more readily to this.