Today's BONDS!

waggie945 · Dec 18, 2003

is trading extremely well given the fact that the dollar has once again gotten weak late in today' session!

Cutten · Dec 18, 2003

Quote from Walther:

Cheaper dollar makes it cheaper to buy bonds for foreign investors

How? A 4% yield is a 4% yield. 100k Euros may buy $124k rather than $83k, but the coupon payments are affected in exactly the same way (a 4% yield pays 4k Euros in either case), so the yield on purchase is the same regardless of the dollar level.

The only way a bond becomes "cheap" for a foreigner due to exchange rates is if the currency in which it is denominated subsequently rallies.

Walther · Dec 18, 2003

Quote from Cutten:

How? A 4% yield is a 4% yield. 100k Euros may buy $124k rather than $83k, but the coupon payments are affected in exactly the same way (a 4% yield pays 4k Euros in either case), so the yield on purchase is the same regardless of the dollar level.

The only way a bond becomes "cheap" for a foreigner due to exchange rates is if the currency in which it is denominated subsequently rallies.

I think that you already answered your question. Investor buys at par and gets yield plus premium when dollars rebounds. Unless you are assuming that dollar will never rebound, it is a good deal for them.
If not for a foreign buying Bonds should be dropping below 102 by now IMO.
Walter

riley · Dec 19, 2003

Hi Waggie 945
Do you trade the mini version of the 10 and 30 year bond? I would like to trade these, but the volume is almost nil. Any ideas? Thanks

waggie945 · Dec 19, 2003

No, I have never even tried to trade the "e-mini" version of the 10 or 30 year Futures . . . If you are concerned about the daily range being too much for your account, try the full electronic contract on the 10 year, then go to the 30 year when you feel that you are ready!

riley · Dec 19, 2003

thanks---I will give the ten year a try.

Kicking · Jan 9, 2004

I have a question for the bond veterans of the board:

Bonds exploded on the upside today at 8:30 am ET on the employment report . The bulk of the move- almost one point- took place in 1 minute. If you were to have a position during such a reaction and it goes against you, how much slippage will you suffer on a stop . I guess my question is do you take a $1000 loss per contract in seconds or can you get out with 5-10 tick slippage?

illiquid · Jan 9, 2004

I saw a few offers 5 or 6 ticks up after the release which might have been available for a second or so, I think the lower unemployment gave the pop just a little bit of a hesitation.

FX-Trader · Jan 9, 2004

Quote from riley:

thanks---I will give the ten year a try.

ZB 30 yr / ZN 10 yr / ZF 5 yr

They all have good volume. "Speed" and daily range goes down from "left to right".

chisel · Jan 9, 2004

Quote from Kicking:

Bonds exploded on the upside today at 8:30 am ET on the employment report . The bulk of the move- almost one point- took place in 1 minute. If you were to have a position during such a reaction and it goes against you, how much slippage will you suffer on a stop . I guess my question is do you take a $1000 loss per contract in seconds or can you get out with 5-10 tick slippage?

I had a buy stop (1 lot) at 109'25 before the number that was filled at 109'27. I briefly saw over 100 contracts offered at '27. I don't know where the next trade was above '27.