The Macro Trading Floor The Bond Market Is On Fire
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Oct 25, 2024 U.S. bond markets are ablaze as election jitters spark sell-offs and rising yields. The hosts explore how political events intertwine with financial strategies. They also examine the U.S. labor market's recovery and its contrasts with pre-pandemic levels. Meanwhile, Canada's interest rate cuts are scrutinized, revealing its risky economic ties to the U.S. Lastly, the complexities of bond yields and currencies, including the intriguing dynamics of the dollar and precious metals, add depth to their discussion.
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Election Impact vs. Economic Trends
- It's difficult to isolate the impact of US elections on markets from general economic trends.
- Often, economic data and political odds move together, making it hard to discern true causality.
Leverage and Options Trading
- While options offer a cheaper entry point for trading, their leverage can magnify gains or losses as delta expands.
- Accumulating out-of-the-money options in the same direction can still significantly impact dealer hedging and market movements.
US Labor Market Rebalancing
- The US labor market is returning to pre-pandemic levels, similar to those seen in 2017-2019.
- The market primarily reacts to the establishment survey, not the volatile household survey.
