Tuesday, September 19, 2006

Increasing the Bund short


Sold some more Dec '06 Bund futures...£10/tick at 117.46 (thats about
3.77% on the 10y Bund)...now have £15/tick position. Would like this to
be up to £50 at the right time...no way the ECB can stop any time
soon...see my note from a few days ago for details. ECB always letting
inflation remain too high = way behind the curve in hiking rates =
steeper and higher long rates.

As a slight aside, it does interest me that for years, the "market"
never seems to want to put on steepeners...always Bull or Bear
flatteners...but if risk premium does pick up, the curve should steepen
nicely. Think this could be the next big "thing" to happen in capital
markets.

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