Fed futures already reversed all of the Kocherlakota sell-off. GS Hatzius now seem to be backing out of his call for a Fed hike in 2013 Q1
The Goldman call that all of a sudden a slowdown in coming is suspiciously coordinated with (ex-goldmanite) Dudley's Friday comments. Meanwhile, Silver hits a new post-Hunt Brothers high, up nearly 4% since Dudley hit the tape on Friday. We'll dub the latest move in silver the Dudley move. I haven't checked my SLV calls, but I expect they're happy.
Good to see an intelligent discussion about this sort of thing. As an observation Daal you seem to me making predictions for the coming year or so- shouldn't these sort of macro plays be held for much longer time periods if you are not using technical analysis for timing?
You are correct in most trades. In the Fed futures the contract will expire and get cash settled at an specific date so thats why I like it, the market can't have delusions for too long and if I'm correct I will cash as a long I dont let the swings scare me out. But in a lot of other ones I don't have a clue when they will work, the EUR short has been losing money, I have been cutting down lately and I dont plan to go back there with a larger position until there is some kind of catalyst
Well, it's all on the back of the previous FDIC decision to include the reserve deposits held at the Fed when calculating the insurance fee. The new rules went into effect today. Either the set of exempt assets/institutions was smaller than people expected or people didn't expect it at all, but short rates (esp GC, but FF as well) are collapsing and LIBOR is expected to follow.
It seems that the markets expect the new EFF to be 0.11%, at least for right now with the SFP shutdown
It seems to me that the likelihood of 2 hikes is pretty low so the trade has both good expectation and high chance to pay off(or at least a small loss on 1 hike). But its hard to quantify a risk with fed futures, in theory its 100% of my account because they could drop to 0 tomorrow