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Curve Steepener


benhacker

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Kudos to Oldye and Ericopoly (I believe) who were definately in support of betting on the 10/30 Treasury yield spread widening.  I thought it was a bit of an odd idea, but everything played out as expected, and the spread went from 30bps to 90bps.

 

Hope you guys made some coin here in some way.  Good call.

 

Ben

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Thanks for the Kudos Ben, but I can't take credit for it since my thought and reasoning were incorrect and b) I never placed the trade.  The yield curve inverts whenever there is a lot of money betting on recession/depression, just like in 1998 with Ltcm, some large country could have defaulted on its debt and caused the yield curve to invert, can only be sure something crazy doesn't happen with hindsight.  I'm sure one could set up a trade where there wouldn't be much at risk if things went wrong but the gains would also been pretty limited. 

 

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