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Alpha Exchange

Danny Dayan, Founder and CIO, DWD Partners

Jan 19, 2024
Danny Dayan, Founder and CIO of DWD Partners, shares his perspective on pricing and risks in the US Government bond market. He discusses the launch of his hedge fund, key developments like the Fed SLR expiration and SVB's downfall, and options trades that generate and require premium. The distorted yield curve, government debt, and FX option trades are also discussed.
55:34

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • The US government bond market is currently mispriced, presenting opportunities for asymmetric derivatives trades.
  • Changes in financial conditions, such as interest rates and monetary policies, have a significant impact on investor behavior and market outcomes.

Deep dives

Inflation and the US Economy: A Contrarian View

The podcast episode discusses the current pricing dynamics in the US government bond market and the potential risks and opportunities associated with it. The interviewee, Dany Dion, emphasizes the mispricing of macro markets and the importance of designing asymmetric derivatives trades to take advantage of mispriced opportunities. He highlights the impact of the launch of his hedge fund, DWD Partners, in a period of historically low rates and skinny option prices. The discussion focuses on the pricing of rate cuts in the market, with Dany arguing that the market is priced for substantially more cuts than will actually occur, presenting opportunities for option trades in short-dated rates. He also explores the implications of the explosion of government debt and advocates for FX option trades based on the potential decline of the Euro and Canadian dollar relative to the US dollar. Overall, Dany provides a contrarian view on current pricing dynamics, highlighting potential mispricings and trading opportunities in the market.

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