19^th January 2010

Bond Futures

Overview

Over the last five days we have seen longer dated government bond futures drive higher after a couple of weeks of consolidation. The Bund hit a 2010 high yesterday of 122.78 amidst quiet trade due to the US bank holiday. This week all eyes will be on US earnings with many US financials reporting. (more...)

15^th December 2009

Bond Futures

Overview

Over the last five days we have seen the Bond futures pull back from last week’s highs as fears over a potential government debt crises subside for the moment. This has been in-line with equity markets which have recovered strongly from their respective lows. (more...)

8^th December 2009

Bond Futures

Overview

Over the last five days we have seen the Government Bond futures under pressure as fears surrounding Dubai waned and a strong payrolls number increased fears surrounding the timing of monetary policy unwinding. This week could be relatively quiet in comparison but it is worth noting there are several large US supply auctions and that the German bond futures roll today. (more...)

4^th December 2009

Macro Overview

The Changing role of the US Treasury Note

The phenomenal growth of the shadow banking system in the last 2 decades has ushered in a new paradigm for globalisation and markets. The sheer scale of financing global trade through the use of this system means that its tentacles reach every corner of modern day corporate financing, from small business to the behemoths of multinational giants. Traditional banking and the financing of trade used to rely on customer deposits as collateral. However the rapid globalisation of trade in the last 2 decades meant that traditional deposit bases were not large enough to collateralise the complex financial transactions that were taking place. Thus saw the quiet revolution of the use of securitised debt to take over as the collateral of choice. This ensured the rapid growth of the shadow banking system, which imploded spectacularly last in 2008. (more...)

1^st December 2009

Bond Futures

Overview

In the light of the negative news out of Dubai and continuing sentiment the Bund has rallied significantly over the last five days. On Friday when the panic surrounding Dubai peaked, the bund hit highs of 124.06, a price not seen since April 2^nd. The US Ten Year mimicked the action of the Bund; highs of 121.215 represented a price not seen since mid May. (more...)

24^th November 2009

Bond Futures

Overview

Over the last five days the Bund has ground higher reaching November highs at 122.70. The US Ten Year has for the first time in the last couple of months underperformed in comparison merely holding onto gains achieved in previous weeks. Last week we had the release of US CPI and PPI data both of these were broadly in line and failed to shock the fixed income markets.

(more...)

17^th November 2009

Bond Futures

Overview

Last week was quiet in terms of economic releases although we did see 3 large auctions in the US. Demand for these was seen as satisfactory by market participants and commentators although they provided little more than volatility for short term participants. Over the last five days we have seen the Bund predominantly trade sideways with the exception of yesterday morning when fears surrounding Greek government bonds provided the stimulus for an aggressive 60 tick drive higher.

A similar sideways trading pattern has been seen in the US Ten Year although a significant rally was seen last night on the back of some dovish comments out of Fed Chairman Ben Bernanke.

(more...)