Ranting About Ratings…
Zak Vora, July 1st, 2010
01/07/10
Years – Mids
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Change since 30/06/10
Hot on the heels of yesterday’s Daily you get another installment to help put you to sleep. Now I’m not one for getting irritated but do these rating agencies go out of their way to make announcements after most punters have gone home. They are not only useless, (I think I’ve written enough on that topic in the past), but they now have the incapability of announcing their potentially market moving news at an appropriate juncture, waiting after the markets gone to get a collective beer for the night. As it happens the threat of downgrading Spain by Moody’s didn’t impact markets that significantly, however, treasuries did catch a bid.
The real market mover in the offing now is tomorrow’s NFP figures. The market is looking for a loss of 125k jobs (with distortions once again due to the census hirings), with the change in private payrolls expected up 110k. As ever I’m after your expectations of what you think the headline figure will be along with your expectations for the unemployment rate, forecast to be 9.8%. I’ll give my expectations along with the trader’s poll tomorrow.
In the meantime, however, I’m itching to throw out a trade idea. I’ve been talking to a few players and been arguing that I like the idea of paying USD 1yr interest rate swap, 1yr forward at 1.24%, where it is. Even with the possibility of the US employment numbers coming in weak I favour the risk of being long rates, especially along this part of the curve where we sit at critically low levels in yield in the 2yrs. US numbers of late may well have been coming in mixed, concerns of a double dip recession in the States may well be rife, however, a mildly healthy set of numbers tomorrow will cause the red pack Eurodollars to back up and cause the USD 1yr-1yr to squeeze higher. So here’s the plan, pay 1.24% for 25k a basis point, stop-loss at 1.15%, (think I see the low at 1.19%), with a take profit at 1.48%.
But before you toy with the idea of putting the trade on, hit that reply button and let me know your estimates for the Non-Farms
Have a good day…
USD 1yr-1yr Forward Interest Rate Swap.
Current Price 1.24%
Go Long 1.24% for 25k a basis point
Stop Loss 1.15%
Take Profit 1.48%
This entry was posted
on Thursday, July 1st, 2010 at 5:44 pm and is filed under Blog, Featured.
