SCOTTRADE ACCOUNT IT'S TIME. It's time for an easier way to invest. Open a Scottrade Account
Apply Now

Chart Of The Day: Reversal In The Debt Complex

By Matthew BradbardBondsAug 25, 2013 12:30AM ET
Chart Of The Day: Reversal In The Debt Complex
By Matthew Bradbard   |  Aug 25, 2013 12:30AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
Since establishing an interim top, this has been a one way trade as of the beginning of May where the long end and short end of the curve has each gotten hit. 30-yr bonds have depreciated 12%, 10-yr notes are lower by 7% and the March 16’ Eurodollar futures are lower by 1.3%.

Lets quantify this: What are the margins for these three instruments and what does this price action mean for (1) futures contracts? Please do not think I am implying that all my clients got short and stayed with this trade for the last 4 months. That is not the message I am trying to convey.

30-yr Bonds:
  • Initial margin - $2,750
  • Maintenance margin - $2,500
  • Close to close for 5/2 to 8/22 - $17,875
10-yr Notes:
  • Initial margin - $1,623
  • Maintenance margin - $1,475
  • Close to close for 5/2 to 8/22 -$8,609
  • Initial margin - $880
  • Maintenance margin - $800
  • Close to close for 5/2 to 8/22 -$3,050
From current levels, I think we get a rebound in the debt complex and I have put three charts of the instruments I trade in this complex below. I expect a trade higher in the coming weeks lifting futures to the resistance levels (the red horizontal lines) I drew in each chart. I open the idea of a rally and will use higher trade to scale clients into bearish trade going into the FOMC meeting in mid-September. My favored play remains trading the short end of the curve; '16 Eurodollar futures and options.

Over the next several years I do expect the path of least resistance in the debt complex to be lower, so traders should use an advancement in the coming weeks to exit remaining longs and to gain bearish exposure.

30-yr Bonds:

10-yr Notes:

March 16’ Eurodollars:

Disclaimer: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities and/ or financial products herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed to be accurate. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors.

You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results. This report contains research as defined in applicable CFTC regulations. Both RCM Asset Management and the research analyst may have positions in the financial products discussed.
Chart Of The Day: Reversal In The Debt Complex

Related Articles

Chart Of The Day: Reversal In The Debt Complex

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post 1000
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post 1000
Report this comment

I feel that this comment is:

Comment flagged

Thank you!

Your report has been sent to our moderators for review
Add Chart to Comment
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.