All posts by Trading Technologies

the white house

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

By:

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. Continue Reading →

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

By:

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.

Continue Reading →

Guess What Day It Is! It’s FOMC Day!

By:

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.

Continue Reading →

geoff parker

The Coming Platform Revolution in Financial Markets

By:

The following is a guest post authored by Geoffrey Parker. He is a professor of engineering at Dartmouth College and a visiting scholar and research fellow at the MIT Initiative for the Digital Economy. Before joining academia, he held positions in engineering and finance at General Electric. He has made significant contributions to the economics of network effects as co-developer of the theory of two-sided networks. He received his BS from Princeton and his MS and PhD from MIT. You can follow Geoff on Twitter at @g2parker.

Given the dramatic change now underway in financial markets and exchanges, it’s tempting to believe that the industry is in uncharted territory. And, as we’ll see below, there is some truth to this view. However, it’s worth remembering that the industry went through a similar phase of change when exchanges such as the CME became electronic instead of physical markets. Floor traders gave way to traders sitting at computer terminals and, increasingly, to algorithmic trading machines. Electronic completion offered a number of immediate advantages that included better price discovery, improved access to markets and a better ability to create customized products that better fit needs. For example, firms that wished to smooth the value of assets such as power plants or pipelines against commodity price volatility were able to tailor their hedging strategies to their exact needs.

Continue Reading →

economic bubbles and trading

The Art of the Bubble

By:

I may be old, but I’m hoping that at least I’m getting some wisdom out of my experience. The MacroTourist recently wrote about the potential for a bubble in fixed income and why you just can’t know.

Bollocks!

I’m not English. And it may seem that I disagree with The MacroTourist (I highly recommend the blog) about the bond bubble. I do not. Instead, I firmly disagree that you can’t know. Oh, you know!

Continue Reading →