One Word, And One Word Only: “Duration”

When central banks pull the punchbowl away, you’re going to have some problems if you’re caught with your hand in the duration cookie jar.

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Volatility Collapses (Again) As Investors Cling To Goldilocks Outlook On Brexit Wednesday

It’s quiet out there. Well, except for that whole UK officially leaving the EU thing. As outlined earlier this morning, Theresa May will make the UK’s split with the EU official on Wednesday, sealing the economic fate (literally, as they’ll be a hand delivered letter involved) of the British people and very possibly relegating the…

It’s Falling Apart: Reflation Trade Shrivels Up And Dies As Markets Sour On Risk

Well, the dollar is under pressure on Monday, just as we said it would be on Sunday evening. The Bloomberg Dollar Spot Index fell as traders digested the failure of the GOP health care bill on Friday. This is the index’s eighth drop in the last nine days, and as Bloomberg notes this morning, “further losses of…

Mind The Cross-Atlantic “Gaps”: Your Week Ahead Preview

Earlier, we talked a bit about Donald Trump’s waning political capital and the extent to which rising policy uncertainty in the US and declining political risk in Europe may ultimately lead to a narrowing of rate differentials, painting a bearish picture for the dollar. Meanwhile, the yen is likely to remain bid as its fortunes are…

“Hope”: Health Bill Failure Isn’t Death Knell For Trump Trade, One Bank Says

We’ve said it before and we’ll say it again: one-way bets and crowded trades are inherently susceptible to getting caught horribly offsides when sh*t goes wrong. And although specs have trimmed 10Y shorts over the last two weeks (they cut around $7.4m/DV01 in the week ended Tuesday, the second straight week of pared bearish bets), eurodollar shorts are still…

How To Exploit The Passive Herd With One Simple Strategy

If you frequent these pages, you’re well acquainted with the concept of passive investing and its rise to prominence in a world dominated by the proverbial “rising tide that lifts all boats.” Well it stands to reason that if passive models are forced by … well… by the fact that they’re model-driven, to rebalance at predictable times, there…

“Things Are Calm. Too Calm”

As we said earlier, “not a creature was stirring” over night. Or, put differently, “it’s quiet out there.” “Maybe too quiet.” Former FX trader Richard Breslow agrees and he seems to be feeling a bit “punchy” on Thursday morning (to quote one of his missives from last month). Below, find his latest and do note…