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The Spaniard

Big Bet Placed Against The Us Dollar's Aaa Rating

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with the use of futures, you have to have margin capacity behind the trade. That means with a single push of a button someone was willing to commit more than $1 billion of real capital to this trade with expectations of a 10-to-1 return ratio.

You only do this if you see an edge.

This means someone is confident that the United States is either going to default or is going to lose its AAA rating. That someone is willing to bet the proverbial farm that U.S. interest rates will be going up.

Not sure what to make of that, if it's a bet on default then doesn't that dilute the value of any gains made anyway? So it's a bet on the rating being cut, more likely?

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Meeting in NY starting in about an hour between investment banks and credit rating agencies - same thing :unsure: - re downgrading of US rating, what it will mean, etc.

I was going to attend but I have to go to Lidl. :blink:

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Meeting in NY starting in about an hour between investment banks and credit rating agencies - same thing :unsure: - re downgrading of US rating, what it will mean, etc.

I was going to attend but I have to go to Lidl. :blink:

Me too, but I'm just popping out for chips, so chances are, I'll miss it.

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Me too, but I'm just popping out for chips, so chances are, I'll miss it.

Anyone else here not going. Best to get our excuses in now.

I suppose without our input they will just kick the can down the road again, award themselves some enormous bonuses and...

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Not sure what to make of that, if it's a bet on default then doesn't that dilute the value of any gains made anyway? So it's a bet on the rating being cut, more likely?

They'll make money in either outcome, they're shorting Treasury bond futures, downgrade would result in future selling off a couple of points, default would result in it selling off a lot more points than downgrade.

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I wonder if we will get a flight to (relative) safety of UK bonds? What have they been doing so far throughout the US 'crisis'?

I can't go either, I've got to wait in for the postman to deliver my recently ordered shiny things :)

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Bill Gross reportedly has a volatility type spread on a few months ago.

Given the uniqueness of this juncture it would be more surprising if one of the big players wasn't protecting their bonds against some form of default.

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They'll make money in either outcome, they're shorting Treasury bond futures, downgrade would result in future selling off a couple of points, default would result in it selling off a lot more points than downgrade.

Thanks for the post

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0.1% oh dear. It's all kicking off, could be a black Monday thread coming!?

Dunno, but my chips were delicious.

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Is there any way for an average person to place a leveraged bet on interest rates going up?

There are several approaches...

Spread bets have already been mentioned - but leverage here holds big risks... because the leverage applies symmetrically to your margin account both when the market moves in your favour and against you.

Similar to spread bets are contracts for difference - and these may be available to mere mortals through a broker.

The way that appealed to me most when I looked into doing something like this was using options. With options, you can leverage your capital without risk of running up debts on credit - while simultaneously eliminating the risk that you lose your capital and position should an abrupt spike go against you - hence, possibly, allowing greater leverage - depending upon which risk profiles you find acceptable. I'm not aware of anyone offering interest rate swaps (or interest rate "swoptions") on a retail basis - but I did find saxobank.com offering foreign exchange options... and, if you're interested in central bank rates, there should be a strong correlation with foreign exchange rates... assuming you aren't talking about interest rates going up globally in a coordinated action between central banks.

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  • 336 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%



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