Please do if you did not! While … Over and above the usual reasons for why a steep yield curve is norm (compensation or risk premium for investing in longer-dated bonds), a steeper yield curve means that short-dated bonds are relatively more expensive than longer-dated bonds. "rally." Explanation: if you receive fixed in a swap (so pay the Libor leg), and rates go down then you will have made money on the swap. re- + ad + ligare to bind. employment picture and still positive—albeit slowing—GDP growth. It does, but primarily as a component of expected real rates, the closely watched measure of interest rates adjusted for inflation. there have been more sellers of longer-dated bonds than of shorter-dated bonds. We truly appreciate your support. to reassemble, esp. At those times, rallies can become self-perpetuating. rall′ied.—n. All the other buy/sell jargon falls into place: “mine” (for swaps) = I buy the swap = I pay fixed, “yours” (for swaps) = I sell the swap = I receive fixed, “I got hit” (for swaps) = I bought the swap = I pay fixed, “I got lifted” (for swaps) = I sold the swap = I receive fixed, “I got given” (for swaps) = I bought the swap = I pay fixed. So I would say that “swap rates rally” means that swap rates increased. Why? The continued rally in yields is a potential red flag. and pa.p. Just to state the obvious, the terms rally and sell off are used in all types of markets (eg equity, commodity, fx, vol) and just mean that prices go up (rally) or go down (sell … Change ), You are commenting using your Google account. Of course, it will be totally free and accessible for all people. AGFI, Highstreet, Doherty and Cypress are registered as portfolio managers across various Canadian securities commissions, in addition to other Canadian registrations. So in summary we have two ways of steepening, and two ways of flattening, and these 4 possibilities give rise to all the bull/bear/flattening/steepening combinations: Here is how it works in practice: you hear. Get instant definitions for any word that hits you anywhere on the web! Exhaustively complete: a thorough search. Reserve (Fed) does as expected and lowers its overnight lending rate later this Bullion is best known as a time-honored haven from inflation, but there’s more to its appeal, and plenty of conflicting forces at work that can excite commentators and investors. As rates go down, your bond rallies or is worth more and more. I couldn’t believe you joined many dots in my understanding of various loosely connected things in one morning train ride:). A rally is a period of hours, days, weeks, months, or sometimes years during which securities prices consistently rise. if you are pricing an options trade are you buying or selling volatility? The commentaries contained herein are provided as a general source of information based on information available as of July 15, 2019 and should not be considered as investment advice or an offer or solicitations to buy and/or sell securities. A rapid increase in stock prices.A rally occurs when investors begin buying one or more stocks in large amounts, which represents an increase in demand and therefore raises the price. 3) A call option in the equity world is an option to buy an equity at a pre-determined price, so it is an option to go long. Painstakingly accurate or careful: thorough research. In fact, during every U.S. recession since the 1980s, the normally stable link between the metal and the currency inverted. if you are pricing a rates trade are you long or short the market? ough (thûr′ō, thŭr′ō) adj. The reason U.S. real rates matter for gold, is that they influence the strength of the dollar -- the single biggest contributing factor in gold’s tick-by-tick price moves, based on an analysis of historic price correlation. and relies on interpreting the swap rate as a price of something. “I paid in 5 year” = I entered a spot-starting 5-year maturity swap in which I pay the fixed-rate leg and receive the libor leg. if you are pricing a steepener trade are you buying or selling the spread? “The Bond & Swap Relation: Long = Receive, Short = Pay” That’s often seen as one of its strengths, as it lowers the volatility in a multi-asset portfolio. A stereotypical Finnish English accent. And for the dollar, it’s not the absolute level of real rates that matters, but rather how they compare with those of other currency peers. There are 70,000 Filipinos living in Southern Nevada, and they've obviously been very supportive of Manny, we felt that we owed them this type of a rally and we felt that we couldn't do it here (at the MGM Grand) because Floyd, quite properly, would have objected. I came across your blog when I was searching around for jargon explanations on IRS trading (for an internal trainning of new traders).
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