Bond Market Pricing and Trading Strategies
Describe and analyse the current economic situation in an economy (or economies) of your choice. Discuss the outlook for short-term interest rates and/or bond yields. Do not make this section a general review of global economic developments. The analysis should support your chosen trading strategy. Address some of the following questions:
• Is economic activity picking up or slowing down?
• What is the current trend of borrowing activity in the household and corporate sectors and is it sustainable?
• What is likely to be the impact of any changes in government policy?
• What is happening to economic activity and policy in the major trading partners?
• Is there any evidence of unsustainable imbalances building in the economy?
• How much available slack is there in the economy?
• Is there any evidence of inflationary pressures increasing?
• Is the central bank likely to be raising or lowering interest rates over coming months?
2. Evaluate what is currently discounted in the market
Examine what is currently discounted in the interest rate markets and assess whether there is a trading opportunity based on your evaluation of the economic outlook. You should address some of the following points, where appropriate to your choice of particular strategy:
• What is priced into futures contracts concerning central bank policy?
• What are the forwards discounting for the path of bond yields?
• How is the shape of the yield curve priced to evolve?
• What are the forwards discounting for short rate or bond yield spreads relative to elsewhere?
• What allowance for risk premiums should be made in inferring what is priced in to the forwards?
• How are risk premiums likely to behave in the circumstances of your outlook for the economy?
• What are the risks or possible scenarios relative to your central case view?
• How are the risks skewed, in your opinion, relative to the forwards?
3. Identify a trading strategy
Formulate a trading strategy based on your analysis of the economic outlook and what is currently discounted in the markets. Your strategy might include one of the following, for example:
• Outright long or short at the front-end of the yield curve.
• Calendar spread trade using futures contracts.
• Short rate spread between two countries.
• Outright long or short at the long-end of the curve.
• Trades to anticipate a change in shape of the yield curve.
• Bond yield differential trade between two countries.
• Box trade of one yield curve against another.
• Long or short CDS index trades.
• Long or short emerging market credit.
4. Monitor the performance of the strategy
Finally, having formulated the trading strategy, state how the performance of the trade will be monitored. Traders are constantly reassessing their strategy in the
• What is the initial target for the trade?
• Will you have a rigid stop-loss for the trade?
• What will be the most important pieces of economic information to monitor?
• What sort of news would cause you to reassess the trade more positively?
• Would you increase the size of the trade under certain conditions?
• What sort of news would cause you to reassess the trade more negatively?
• Would you take the trade off under certain conditions?
ORDER THIS ESSAY HERE NOW AND GET A DISCOUNT !!!
Our Service Charter
-
Excellent Quality / 100% Plagiarism-Free
We employ a number of measures to ensure top quality essays. The papers go through a system of quality control prior to delivery. We run plagiarism checks on each paper to ensure that they will be 100% plagiarism-free. So, only clean copies hit customers’ emails. We also never resell the papers completed by our writers. So, once it is checked using a plagiarism checker, the paper will be unique. Speaking of the academic writing standards, we will stick to the assignment brief given by the customer and assign the perfect writer. By saying “the perfect writer” we mean the one having an academic degree in the customer’s study field and positive feedback from other customers. -
Free Revisions
We keep the quality bar of all papers high. But in case you need some extra brilliance to the paper, here’s what to do. First of all, you can choose a top writer. It means that we will assign an expert with a degree in your subject. And secondly, you can rely on our editing services. Our editors will revise your papers, checking whether or not they comply with high standards of academic writing. In addition, editing entails adjusting content if it’s off the topic, adding more sources, refining the language style, and making sure the referencing style is followed. -
Confidentiality / 100% No Disclosure
We make sure that clients’ personal data remains confidential and is not exploited for any purposes beyond those related to our services. We only ask you to provide us with the information that is required to produce the paper according to your writing needs. Please note that the payment info is protected as well. Feel free to refer to the support team for more information about our payment methods. The fact that you used our service is kept secret due to the advanced security standards. So, you can be sure that no one will find out that you got a paper from our writing service. -
Money Back Guarantee
If the writer doesn’t address all the questions on your assignment brief or the delivered paper appears to be off the topic, you can ask for a refund. Or, if it is applicable, you can opt in for free revision within 14-30 days, depending on your paper’s length. The revision or refund request should be sent within 14 days after delivery. The customer gets 100% money-back in case they haven't downloaded the paper. All approved refunds will be returned to the customer’s credit card or Bonus Balance in a form of store credit. Take a note that we will send an extra compensation if the customers goes with a store credit. -
24/7 Customer Support
We have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.