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Thursday, 7 February 2013

Carney appearance was a damp squib, as expected. Unfortunately there's been no spike in short sterling tosell into, although there was in gilts at the open this morning, so I've taken the opportunity to increase my gilt short from 20 to 30 contracts, ie

sold 10 G H3 at 116.17

This is in line with the aim of switching the short in L M6 in to a short in gilts from a few days ago. The carry is less painful, it doesn't fly so directly in the face of 0.5% rates and takes advantage of the poor budget fundamentals (which are arguably a positive factor for  L M6) and the crowded safe haven positions in gilts from the last 2 years (which probably now needs to be unwound or reduced).

And there's the wildcard of how the Bank intends to exit its QE holdings - not that I'm holding my breath for a sale announcement, but the lurking threat of something being announced is far from being priced into the mkt.

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