The Phaserl


Citigroup Bond Trader: “I Know How It Ends, I Just Have No Idea When That Is”

from ZeroHedge:

From a note blasted by Citi bond and CDS trader, Jack Weaner, to clients on Friday afternoon.

This definitely had the feel of a Friday in August, which is pretty unsurprising given that it is.  HY cash better across the board today, not a huge amount, but you can tell that people are feeling the pressure to be invested in the market given the lack of options out there. 

It feels as though we are set up for a slow grind into the last 2 weeks of August as clients continue to buy risk (in particular BBs) and if that is not some kind of warning sign for people I don’t know what is.  I remain fairly bullish here, but it’s worth thinking about how this phase of the rally will play out.  Volatility is dropping and bonds prices continue to rise.

Not gapping higher, but steadily higher. 


Low vol and rising prices is a perfect recipe for fast money / the street getting longer.  You no longer get punished on random positions and your P&L keeps steadily ticking higher. 


Thus you feel emboldened to get longer as you don’t feel the risk that you are carrying. 


Everyone gets longer for a period of time and then finally you have the ability to have a sell off. I know how it ends, I just have no idea when that is. 

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