Short sterling

[gooseman]

what on earth is happening?! general repricing? huge move. anyone any bright ideas?

 

[arabianights]

stay the **** out I think!

And on news if in doubt sell.

Euribor and swiss doing the same sort of thing in their own ways (although maybe a bit more logic with those two).... could be banks hedging mortgages is one rumour but I don't really buy this myself.

Stagflation scenario?

 

[gooseman]

looks like it. some swedish bank yesterday said sterling was 30 ticks too high which didn't help...don't get it...

 

[arabianights]

I shorted sep dec at .015 today and took one and half ticks from it but I don't thinkn you can touch sterling unless you're happy to take a long term position (in which case it really seems great value)... except on figures. At some point there's going to be a significant rally I'm pretty sure.

Course if you belive stagflation is coming we could have 15% interest rates

 

[gooseman]

nice.

15% might be a little toppy!!

 

[maxima]

they call it short sterling for a reason! :innocent:

 

[grantx]

Max,

I think it's because you can only sell it, never buy it. Compare the Long Gilt.

Grant.

 

[arabianights]

Now we're expecting a rate hike by December (plausible) ... or three (not plausible, surely?) if credit crunch eases a bit and libor/base spread narrows...

Luckily I'm not trading it.

 

[gooseman]

i think it is worth keeping a very close eye on newswires today-it's the LIBOR meeting and if they move the goalposts on how it is calculated we could see a very sharp dislocation.

sterling is just undergoing a massive reprice as the MPC now really have to hit the brakes hard to get on top of inflation.

yesterday-rubbish housing numbers and we end up off 10ticks!

 

[MrGecko]

this should be interesting...

 

[MrGecko]

all eyes on 10 - 12 ish.

 

[arabianights]

Question has to be in which direction is it likely to move sterling... obvious answer is down based on what happened with dollar libor when they complained about manipulation enough?

BBA review is supposed to be coming out at around 1600 GMT I thought?

 

[gooseman]

i would have thought it would get trashed given the banks have been misrepresenting their rates....no idea what time anything will be announced.

this could be carnage,...

 

[arabianights]

All it will need is someone with huge balls to sell 2000 lots of white pack (without even bothering to read the report) and I think you could move it 50 ticks if everyone's scared enough.

If I had huge balls and a much bigger account balance I'd fade that move too as I don't think the report will say very much.

As it is... I'll stay away I think. Or maybe join in with the move in very small size.

 

[arabianights]

Although they just said on CNBC the allegation is that the LIBORs are being set too high so they can lend at higher rates.

One thing I've noticed is that the rates seem to be higher in the morning than in the afternoon, which I suppose makes sense from the POV of banking regulations... so if LIBOR is moved to being fixed in the afternoon it will probably fall... does this make sense to anyone?

 

[gooseman]

i've done some more digging in to this and i think i might have been slightly jumping the gun. what you are saying makes sense however there are a number of reasons for representing your LIBOR quotes both ways. for example recently US overnight rates have spiked massively-the intention is to try and get as much cash on board as possible for the end of the second quarteer. similarly if the banks want to feign a lower fixing to make it slightly cheaper to borrow they can.

there is an article on Forbes which is quite good which basically is saying that any approach will be softly softly and changes will be 'tweaks' rather than wholesale changes. fair point given the sheer size of derivatives currently floating around which are benchmarked to LIBOR.

looks like the review will be announced at 5BST.

i think i may have got myself all excited for not very much

 

[gooseman]

erm right. sterling and bor.i have never seen moves like this....

 

[Lucky_81]

wow - bor. This is the biggest move in the last decade - fact.

 

[red army]

wow - bor. This is the biggest move in the last decade - fact.

I was involved with the bor today and i thought yesterday was choopy enough but today especially over nfp was squeaky bum time!

 

[MrGecko]

Stumbled across this while I was doing my homework... (this is the transcript, watch the vids if you're lazy) - interesting to look at the differences between LIBOR and EURIBOR given the circumstances.

FT.com / Home UK / UK - Transcript: Ciaran O?Hagan of Société Générale