I got lucky on my Bond trade. Option expiration was on Friday. I was afraid we would get a pop when this Grexit finally materialized.
Admitedly , I am long rates , 20+ , via the TMV etf. Assurances from an empowered ECB, (was this the real reason?) may help. We will see how US markets react tommorrow. Doesnt help now, but should revert back to steepening after this blows over.
I'm trying to understand why Greek defaulting would impact the GBP/JPY cross or any of the yen crosses besides the euro for that matter. Is the yen really still considered some type of safe haven currency? That seems like a pretty big disconnect. On the one hand it's been made clear that they want a weaker yen and their polices will continue to support a weaker yen, yet here we have it moving 300-400 pips on a Greek default that has little to do with the yen or its crosses.
Mav's post from the other day: 1) Markets do NOT seek risk. Markets are risk averse. In economics a great deal of studying has gone into risk aversion theory (google it). One of the subsets of this theory is something known as "prospect theory". This theory states that if I offer the avg person a chance to receive $10 for sure or a 50/50 chance to either win $20 or $0 they almost always choose the $10 even though the expected value of the second bet is exactly the same ($10). We usually choose the "safe" bet. Now, say this same person has lost $10 and we offer them a 50/50 proposition to make $10 or lose $10. The expected value is zero but that same person will usually take this bet. Suddenly when faced with losses, we are willing to take on risk. Prospect theory is amazing at explaining the psychology of markets and also why most traders fail. Back to your number one, markets seek to maximize their return with the least amount of risk. Or another way, given a certain desired return, we want to pick the least riskiest path to achieve that return. " While Greece is a relatively small player in the Euro, the Grexit is a big deal because if one country leaves it may inspire others to do the same. There are some very smart people that think the euro zone currency will not last due to the inequality of the countries involved. Germany is the strong hand here with Spain, Italy and Greece having weaker hands. This is due to their policies, debt, unemployment, the list goes on. Also with the computer age things are much more correlated. link to El Erian comments on this crisis. Closing the banks for a week is going to make more of a mess of things. http://www.bloomberg.com/news/artic...trols-banks-close-to-contain-fallout-ibh78tb7 second video on link has El Erian comments