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Conquering Chaos: Trump’s Longer Term Effect on Interest Rates and Trading in Swap Futures

The following is a guest post by Christopher Rodriguez, chief marketing and relationship management officer of Eris Exchange, and Geoffrey Sharp, Eris’ managing director and head of sales. Eris is a U.S. futures exchange that offers listed interest rate swap futures. Trading Technologies offers connectivity to Eris through both the TT® and X_TRADER® platforms.

Some traders were more prepared than others for the results of the U.S. presidential election in November. Higher implied volatility, changes in risk premium and increases in interest rates resulted from Donald Trump’s surprise victory. Equity markets plunged then rallied. All told, the month of November was remarkable for traders.

Heading into Thanksgiving, 10-year Treasury Note Yields reached highs not seen since the middle of 2015. The bond sell-off tapered toward month-end, but the forwards predicted a more aggressively rising rate environment. (more…)

Conquering Chaos: Three Traders, Three Stories

As I mentioned last month in Conquering Chaos: Fari Hamzei, Hamzei Analytics, we’ve partnered with Futures Radio Show host Anthony Crudele to ask successful traders how they’ve managed the chaos on the most chaotic trading days of their careers.

Today, we’re recapping stories from three of Anthony’s recent guests.

  • Dennis Parmelee is an independent futures trader who has also been a teacher, coach and real estate investor. He said his most chaotic trading day was a longer-term strategy trading options–specifically silver strips.
  • Miguel Vias, now with Ripple, was the Head of Precious Metals at CME Group when he spoke with Anthony last month. When asked about his most chaotic trading day, he took us back to the spring of 2007, when he was trading gold at Bank of America.
  • Jeff Davis, who currently trades privately, said his most chaotic day was early in his career when he was trading at a proprietary trading firm in New York.

I hope you enjoy their first-hand accounts of conquering chaos.

– Brian Mehta, CMO


On the Oil-Gold Ratio: Why Oil’s Going Higher

The following is a guest post authored by Steve H. Hanke (Twitter: @steve_hanke). He is a professor of applied economics and co-director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at The Johns Hopkins University in Baltimore, a TT CampusConnect™ partner school. He is a senior fellow and director of the Troubled Currencies Project at the Cato Institute.

This post was originally published on the Cato Institute blog. At the time of publication in September, Steve was predicting crude oil futures would be priced around $45-46/bbl in mid-November. The market appears to be confirming his projections, with CLZ6 closing yesterday at $48.03.


Guess What Day It Is! It’s FOMC Day!

Here we are again. Just when we all thought we had it figured out, the election whizzed on the electric fence. Now it is time for the long awaited December FOMC meeting. I’ve written before about positive expected value and a process focused trading discipline. Focusing on the process, i.e., the positive expected value, rather than the outcome enables one to take on asymmetric payoffs with positive expectation even when the payoff is unlikely. Right now, we are heading into this meeting, and the market is pricing the likelihood of a tightening at near certainty. Count me in on expecting a rate hike, but if you have learned anything this year, it should be to expect the unexpected.