Saturday, August 21, 2010

Testing the Steepener Trade

V. crazy week of trading, trades the dow cfds for the first time, opened up IGmarkets account as the spreads on the asx200 cfd is only 1 point, and on a more education note, started trading bond cfds.

Basically I have bought the 5 year bonds whilst shorting the 10 year bonds, something which the hedgies call the steepener play - where people are betting that yields (i.e i/rates) are going to go up - i.e where else can interest rates go when they are already at ZERO??? haha

this trade may take awhile to play out - thus using ETFs are recommended - but I just want to get my skin in the game so that I can actively feel compelled to improve my knowledge of bonds as yields are obviously an important part of global macro themes - and this is my weakest area of understanding/interest.

Link on Bonds Trading

Robertson's Steepener Trade
Why Longer Term Price of Bonds Fall Faster when Rates Rise