Great write up! I would personally love to read the more advanced piece you have on written, swaps are something I have been interested in for a while. An unrelated question I have is do you have any recommendations for researching fixed income, ik that the terminal is the best however the price tag is not possible for me as a college student. I have tried looking online but it’s pretty hard to find any good resources. Any recommendations are very much appreciated!
The problem with that article is that I tried responding to another, which means that there’s no space for a primer.
In fixed income, there’s credit versus rates. Credit analysis is pretty much like equity analysis, but you need to be paranoid. In rates, for anything without options, you just need to understand how discounted cash flow works. Once you can fit a curve, you can price anything. The macro side is more time series analysis. FRED data is almost everything you need to look at the US. Learning macro is tough - the mainstream undergrad textbooks are nonsense, the postgrad ones slightly better but still silly, and heterodox academic authors make things too complicated. If you read stuff by (ex-)market participants, you will eventually find out that 90% of them don’t really understand rates. To see problems, you need to look at a lot of data across multiple countries for a long time. If you try to build a trading rule based on simple “facts” that people claim is true, usual outcome is that it does not work.
Thank you very much for the thorough response I appreciate it! As for learning the macro it is very tough I’m finding out. However Im currently reading Full Employment abandoned and it’s rather good.
True enough. The best time to practice "batten down the hatches" is before the storm arrives, and judging by the uptake, as of this morning, it seems it is a signaling exercise. Which is vastly preferable to a swapping tsunami because CB's waited to long versus tentative trickles gradually swelling into ... ;). Or, if one thinks what is happening is equivalent to QE, then they must be hearing something else, like, "hatch up the battens", I suppose. Anyway, about this "rock" you speak of, does it have an address? rooms for rent?
Great write up! I would personally love to read the more advanced piece you have on written, swaps are something I have been interested in for a while. An unrelated question I have is do you have any recommendations for researching fixed income, ik that the terminal is the best however the price tag is not possible for me as a college student. I have tried looking online but it’s pretty hard to find any good resources. Any recommendations are very much appreciated!
It was here. http://www.bondeconomics.com/2022/12/currency-swap-comments-from-bis.html
The problem with that article is that I tried responding to another, which means that there’s no space for a primer.
In fixed income, there’s credit versus rates. Credit analysis is pretty much like equity analysis, but you need to be paranoid. In rates, for anything without options, you just need to understand how discounted cash flow works. Once you can fit a curve, you can price anything. The macro side is more time series analysis. FRED data is almost everything you need to look at the US. Learning macro is tough - the mainstream undergrad textbooks are nonsense, the postgrad ones slightly better but still silly, and heterodox academic authors make things too complicated. If you read stuff by (ex-)market participants, you will eventually find out that 90% of them don’t really understand rates. To see problems, you need to look at a lot of data across multiple countries for a long time. If you try to build a trading rule based on simple “facts” that people claim is true, usual outcome is that it does not work.
Thank you very much for the thorough response I appreciate it! As for learning the macro it is very tough I’m finding out. However Im currently reading Full Employment abandoned and it’s rather good.
True enough. The best time to practice "batten down the hatches" is before the storm arrives, and judging by the uptake, as of this morning, it seems it is a signaling exercise. Which is vastly preferable to a swapping tsunami because CB's waited to long versus tentative trickles gradually swelling into ... ;). Or, if one thinks what is happening is equivalent to QE, then they must be hearing something else, like, "hatch up the battens", I suppose. Anyway, about this "rock" you speak of, does it have an address? rooms for rent?
The rocks - I think there’s a franchise, but not sure what the website is.