European Risk Adjustment Trade (Stoxx)

The European debt crisis seems to have taken the way of recovery and the rates for European government bonds reflect a positive economic outlook in the Euro area. The Euro Stoxx 50 Index includes Europe’s leading Blue-chips companies. Actually, these companies are  considered as safe as AAA European countries (Germany, Finland, Netherlands) and represent an […]

‘Safe stocks’ up, again?

Since the crisis hit, interest rates have been kept artificially to the lowest level the world has ever seen. This launched what was called the ‘hunt for yield’. As many investors ran for high-yield junk bonds, risk-averse investors who were uncomfortable with that level of risk turned to quality stocks, i.e. high dividend paying stocks. […]

Trade idea: Pay 10y Euro, Receive 10y UK

The main rationale for the trade is a possible positive surprise of the European economy by the end of the year. The periphery has performed well and the recent resolution of the Berlusconi’s issue has reduced the political risk of the area. Moreover, the economic performances outline the beginning of a recovery path: Italy PMI […]

In the Mind of the Federal Reserve

When first appointed in 2006 by President Bush, Ben Bernanke probably didn’t expect his two terms as the Chairman of the Federal Reserve to be the most decisive ones of the past century. First denying an housing bubble, he had to face its real burst and the most threatening crisis since 1929. In 2008, he […]

Follow-up on last week Japan trade idea

Last week we suggested shorting three Japanese financials in light of the 10-years JGB price fall, going at the same time long Olympus Corp. and the Nikkei index, in case no more easing was announced on Tuesday night. Kuroda kept monetary policy on hold and so we entered the trade on Wednesday Tokyo early trading. […]

Conditioned order in Japan: short financials if no more stimulus is added by BOJ on Tuesday night

INTRODUCTION During last months in Japan, extreme monetary policies – also known as Abenomics – implemented by the duo Abe-Kuroda to fight deflation and give a kick to the stagnant economy, have caused a huge reaction all over the markets: the Yen has been slashed, Nikkei index has been skyrocketing in an impressive rally and […]

Lisbon goes back to the market with a €3bn bond issue

Object: €3.0 billion issuance of Obrigações do Tesouro (OT) (fixed rate bonds), interest rate 5.65%, annual coupons On May 6th the Republic of Portugal issued its first new government bonds since requesting an international bailout two years ago, in a heavily-oversubscribed offer of 10-year debt that raised €3bn. The bonds will pay fixed annual coupons […]