Jump to content
House Price Crash Forum
Mega

Massive Short Polsition On The £?

Recommended Posts

Yep, if this trend continues we become the next Greece, the cost of insuring UK debt goes up which means yield will have to increase to make it worthwhile. Increased yeild, increased cost to the Gov (tax payer). Push it up high enough, and UK defaults or gets downgraded. (Not sure how likely that is) Suspect it may add to the case for raising interest rates.

Well, this is how I read it, but I am no expert.

I can only just understand this as its in dealertalk........

http://www.zerohedge.com/article/uk-continues-be-top-sovereign-cds-derisker

Mike

Edited by Lord Lister

Share this post


Link to post
Share on other sites
Yep, if this trend continues we become the next Greece, the cost of insuring UK debt goes up which means yield will have to increase to make it worthwhile. Increased yeild, increased cost to the Gov (tax payer). Push it up high enough, and UK defaults or gets downgraded. (Not sure how likely that is) Suspect it may add to the case for raising interest rates.

Well, this is how I read it, but I am no expert.

We don't need to borrow.

We can print. Greece can't.

Share this post


Link to post
Share on other sites

I can only just understand this as its in dealertalk........

http://www.zerohedge.com/article/uk-continues-be-top-sovereign-cds-derisker

Mike

IT REFERS TO the dreaded CDS or Credit Default Swap. If UK is near top of this table, it must be George Soros again waiting to short the pound bigtime. Even if not, one of letters at the foot of the article makes an intelligent and intelligible point: The UK has announced cuts of £6 Billion to this years spending over which much chat, but is still actually over spending by £3BILLION PER WEEK. The national debt is already £896Billion AND RISING AT £3BILLION PER WEEK. Now get out of that!

Share this post


Link to post
Share on other sites

1 GBP =

1.45973

It hit a high of 1.476 earlier today.

I am massively short on sterling (CABLE bet) and started to get slightly nervous.

What's your rational for the trade (and where is your stop)?

Share this post


Link to post
Share on other sites

I'm shorting the FTSE big-time. The recent rise has been hot air IMO and we're likely to see it going to the low it was at a year or two ago.

Check out the ticker XUKS if interested.

Share this post


Link to post
Share on other sites

I'm shorting the FTSE big-time. The recent rise has been hot air IMO and we're likely to see it going to the low it was at a year or two ago.

Check out the ticker XUKS if interested.

Looks like the you are in for some short term financial pain tomorrow morning.

Share this post


Link to post
Share on other sites

I can only just understand this as its in dealertalk........

http://www.zerohedge.com/article/uk-continues-be-top-sovereign-cds-derisker

Mike

I think you need to stand back and think about what this "zerohedge.com" website is actually saying.

If someone has amassed a short of $3bn of UK 5y CDS that is only $1.4mm/bp of risk. UK CDS over the past two months has traded between say 70bp and 95bp, so we are talking about a P&L swing of say $35mm from low to high. Do you really think $35mm of profit or loss is even significant for the whole market? It is miniscule ... totally irrelevant.

Cable (GBP/USD) trades in the tens of billions per day, moving 1%+ quite regularly. Gilt auctions are sized in the billions, sometimes tens of billions of £.

Also remember CDS is a zero sum game ... for every buyer there is a seller, so the net position is zero.

This website doesn't seem to actually explain what these numbers mean or what the source is. They are making a mountain out of a molehill and I'm not sure they really understand what they are talking about.

Share this post


Link to post
Share on other sites

This is perfectly logical.

UK issuing loads of Gilts to forien buyers. Foreign buyers hedge risk against pound falling - sell CDS.

I don't see how that would work. If you sell a CDS you get an income stream in return which could be in another currency than GBP but wouldn't match any fall in the value of a gilt due to exchange rate fluctuations. If you're trying to hedge against a currency falling I'd assume you'd use currency forwards or FX options of some sort, not credit default swaps.

Share this post


Link to post
Share on other sites

you don't.think you may be mixing it up with separate IR swaps type arrangements.CDS is insurance.you write CDS you get a premium for your trouble.

CDS premiums are paid quarterly over the life of the contract not as a one off payment up front - i.e. an income stream.

Edited by tbatst2000

Share this post


Link to post
Share on other sites

GPB continues to strengthen v € and will do so for months and months.

It continues to strengthen v practically every other currency and will continue to do so if George does what he says he will do on the 22nd.

V $ it will go up to c 1.50 then back down to c 1.30/35 and that should be about it. If cuts continue. Then we can look forward reappraisal to $2 within a year or 2.

A huge short v £ is stupid. And it will soon be covered. What will that do to £?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 146 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.