Hello, idiots.

If you thought yield curves and FX were fun, we’re about to go on a journey to the heart of global macro.

Short term interest rate (STIR) instruments add a whole new dimension to the excitement of “having opinions about what the Fed will do” (as we all know, people with opinions about what the Fed will do are some of the most interesting - and all very reserved about sharing these opinions with others).  

In our previous installments, we covered the basics of trading the US yield curve and foreign exchange. By now, you should have a solid grasp on concepts like curve steepeners and flatteners (in both bonds and futures - steepener = long shorter maturity, short longer maturity and vice versa for flatteners), flies, why interest rate differentials matter so damn much in FX and the general fact that global macro is, in fact, the world’s greatest guessing game. 

If you don’t, go to the remedial class and read the last two installments:

You may be noticing a theme in these pieces, something along the lines of…