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Global Macro Trading for Idiots: Part Two

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In our last installment of “Global Macro Trading for Idiots”, we covered the riveting and edge-of-your-seat action that is trading the US yield curve. By the end of the article (if you were paying to see the trade below the paywall, which you really should have, it was a banger) I had explained how to understand the basics of trading the yield curve and how to implement (using futures) our recommended trade - selling 10s on 2s10s30s when it was -104bps risking 10bps of NAV DV01, expecting a steepening. Over the next two months, 2s10s30s steepened nearly 80bps from our entry. I make no promises the trades in this one will be as good as that was, but there’s only one way to find out! As we all know by now, the yield curve can’t predict anything so I don’t even know why we were talking about it! Now, we’re going to talk about why we’re all here, money. Well, currency, at least. Foreign Exchange (FX) is the most liquid market in the world, employing high leverage to take advantage of small

Note (August 12, 2024): This post was originally published on November 29th, 2024. I’ve removed the paywall and unlocked this post for all free subscribers given the prominence of the carry trade unwind in the Japanese Yen over the past week. I hope it contributes to your understanding! In our last installment of “Global Macro Trading for Idiots”, we covered the riveting and edge-of-your-seat action that is trading the US yield curve. By the end of the article (if you were paying to see the trade below the paywall, which you really should have, it was a banger) I had explained how to…

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