betting

Mortgage rates fall for fourth week in a row – CNN

Mortgage rates fall for fourth week in a row  CNN

Please Bench Your Credit Cards for March Madness Bets

With unpredictable fees and the potential for lingering negative impact, your credit card is better off riding the bench in sports bets.

Back to “Zero Days” Without a Systemic Banking Contagion Flare-Up

The old sign on the trading floor that proudly boasted we had gone 2 days without a systemic banking flare-up (as of yesterday) has been reset to “0,” sort of…  While there’s not as much of an issue as something like Silicon Valley’s failure, the surge in Deutsche Bank CDS got the market’s attention overnight.  We’re starting the day at very strong levels.  In situations like this, we need to keep an eye out for position squaring and a shift from European to American trading sentiment around mid-day. In other words, EU markets delivered rates to very low levels and as EU considerations wane, US markets may push back.  Additionally, if the market is generally long bonds on the week (i.e. betting on lower rates), then end-of-week position squaring could imply a push back toward higher yields.  Of course if we can see this, then traders could speculate about the same thing.  No way to know the future, but just something to keep an eye out for. Here’s a chart of Deutsche Bank CDS.  Higher = more concern: December Fed Funds Futures moved back to their recent lows, with 3.5-3.75% being the target (VERY different from what the Fed foresees).  That discrepancy spells one thing in the weeks ahead: VOLATILITY. 

Fed Hikes Rates; Rates Drop Sharply. Here’s How That Works

There was some debate as to whether or not the Federal Reserve would hike the Fed Funds Rate today, although the consensus was for a 0.25% increase.  That’s exactly what the Fed delivered.  Additionally, markets were (and still are) betting that the Fed cuts rates by roughly 0.75% by the end of the year, but the Fed’s just-released forecasts show zero rate cuts by the end of the year and slightly HIGHER rates by the end of 2024. Despite all this, Treasury yields (a benchmark for mortgage rates) and mortgage rates themselves fell significantly after the Fed news came out. Why in the world could that happen?   First off, the Fed Funds Rate is not a mortgage rate, nor does it directly affect mortgage rates by the time the Fed actually hikes or cuts.  More importantly, Fed Chair Powell spoke about upcoming tightening of lending conditions due to the recent banking drama.  That may seem like a simple enough comment, but it carries a lot of weight in terms of shaping economic momentum. Lending and credit are critical to growth and inflation.  If lending subsides (fewer loan programs or more restrictive requirements to qualify), it puts additional downward pressure on inflation.  And inflation is the key reason rates have remained high. Long story short, in spite of the Fed rate hike and the relatively unchanged outlook for 2024, the market saw some indication of a policy pivot in Powell’s comments–some shifting of the big picture cycle of economic growth and inflation.  Either that, or Powell’s warning on banks caused investors to fear additional banking issues in the days/weeks ahead.

Guide to Speculative Investments

Guide to Speculative Investments

A speculative investment is when an investor hopes to profit from a rapid change in the value of an asset, often one that’s considered non-productive. Many speculative investments are short-term, and they can be made in markets such as foreign currencies, collectives, fine art, and margin trading of stocks. Typically, speculative investments are high-risk positions […]

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Blend focuses on tech, cost reduction as it reports $769M loss

Blend focuses on tech, cost reduction as it reports $769M loss

Blend Labs is focused on cutting costs and courting more users to its Blend Builder platform after posting a $768.6 million net loss in 2022. 

What Is a Bear Put Spread?

What Is a Bear Put Spread?

A bear put spread — also referred to as a debit put spread and as a long put spread — is an options trading strategy where a bearish trader purchases a put option at the same time as they sell another put option with a lower strike price and the same expiration date. Essentially the […]

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Breaking Down the Big Move in Rates and Considering The Road Ahead

Breaking Down the Big Move in Rates and Considering The Road Ahead The 2nd and 3rd largest bank failures in history have happened over the past 3 days.  Markets reacted in a logical direction.  If anything, the drop in rates was made bigger by the fact that the market is searching for evidence that it’s time for the Fed to dial back its hawkish rate policies. That’s what today ended up being mostly about: the market betting on a MUCH lower rate hike profile in the coming months (and rate CUTS starting in a few short months).  Between Tuesday’s CPI data and next week’s Fed announcement we’ll have the data we need and the requisite amount of cooling-off time to have a much better sense of what the road ahead looks like.  Today’s video discusses several of the options, and much more. Econ Data / Events No significant econ data Market Movement Recap 08:59 AM Supermassive bond rally overnight, led by short-term rates.  2yr down more than 50bps at times.  10yr currently down 25bps at 3.45.  MBS up just over 3/4ths of a point. 12:36 PM Strongest levels of the day at 11am and selling off a bit since then.  5.5 coupons still up 3/4ths on the day, but down half a point from highs.  10yr yield up 11bps from lows and now near highs of day at 3.524, but still down 18bps overall.  04:07 PM MBS now up “only” 22 ticks (.69) and 10yr down “only” 16bps at 3.545.  Both are quite a bit weaker on the day, but the pace of losses has been gradual

Traders are betting the Fed will hike rates by a half-point in March

(Bloomberg) — Bond traders boosted bets that the Federal Reserve may re-accelerate the pace of rate increases at the policy meeting later this month, after central bank head Jerome Powell said he’s ready for faster monetary tightening if economic data justifies it. Interest-rate swaps Tuesday showed a shift in bets for the March 22 meeting, … [Read more…]