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by Ashraf Laidi
Posted: Apr 18, 2012 19:04
Comments: 29
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This thread was started in response to the Article:

April Fears Ahead of Fed, Spain & China

Cyclical volatilities in April are backed by fears of a hawkish Fed dissent, resurging Spanish yields & further Chinese doubts
 
 
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cat0nip
Frankfurt, Germany
Posts: 1632
12 years ago
Apr 20, 2012 10:11
monitoring bond yields is crucial for fx pairs. Also trading CFDs on bonds can be very profitable. For ex. the extreme spread of yields across Ezone tells the story that EURO is a failed experiment. Theoretically the spread should be nil.
Saka
China
Posts: 29
12 years ago
Apr 20, 2012 9:24
thanks for tips, cat0nip

I think at least, in a view of investment, equit is a good one to exceed inflation. But I'm only a speculator, who is interest in financial market when the yield of spain soared, resulted in the dive of EU, or when the yield of 2 year US treasury rising, it could anticipate the same in UJ. So this is why analysing bond market is alluring me.
cat0nip
Frankfurt, Germany
Posts: 1632
12 years ago
Apr 20, 2012 7:08
First one needs to understand the difference in strategies that stock traders and bond traders pursue. The equity trader as well as the options trader assumes the price P at time t is mispriced and bets on the trade arbitrage as he believes the market will correct the mispricing
at time t+1 to price p. And so on. Same for fx traders. The traditional bond trader trades also mispricing but in terms of yield, thus he goes for the safety of fixed return and the probability of profit from mispricing of the yield.
When you depict the value of the DOW in USD over the price of indispensable essential basic food you will see the DOW did not return much buying power if at all.
What about bonds inclusive of interest?
Saka
China
Posts: 29
12 years ago
Apr 20, 2012 4:31
hi, DaveO

You know, the bond market in China is not advanced. In developed counties, bond market emerged earlier than equity market, but in China, most people are only familiar with equity but know little about bond. I sure read Laidi's book but still don't totally understand the their relationship. This is why I want to learn it.
Saka
China
Posts: 29
12 years ago
Apr 20, 2012 4:24
Thanks, Laidi

I just feel that the financial crisis is alsways caused by gonverment bond, and it leads the trend of FX or equity market. So this is why I want to learn something about it. But I think you are right, the information mentioned in your book is already enough. So I will review it again.
Ashraf Laidi
London, UK
Posts: 0
12 years ago
Apr 20, 2012 0:38
Saka,

The handbook of Fixed Income securities by Fabozzi is known as the bible on bonds but you probably dont need that much detail. Need to know your technicals to trade futures (price not yield) .My book covers yield curves. Know auctions, econ data, duration, convexity to understand the real nitty gritty. Youll find it on-line.

Ashraf
DaveO
N.Cornwall, UK
Posts: 5733
12 years ago
Apr 19, 2012 12:01
Good question Saka, full of intrigue and many nuances. I don't know of a really good educational site for fixed income instruments and their correlations. I assume you have read Ashraf's book. Perhaps our catnip might comment. I trade the 30 yr and watch all the auctions etc which ultimately reflect in currency direction. You really need a bloomberg or reuters terminal for your data feeds but very costly monthly subscriptions !
Saka
China
Posts: 29
12 years ago
Apr 19, 2012 9:22
hi, Laidi
Where can I learn about how to analyse bond market?
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