TFMkts – Best Ideas Updated and Fixed Income Allocation Change

Sell HYG. I remain nervous about the market. This trade was a small loss 89.35 vs 89.15, but I am just not comfortable with the market and the issue of it switching to a discount from a premium. Take the “fixed income allocation” back to 15%.

Cover 5 year Spain versus 5 year Italy in the bond market. They are now trading with Spain 9 bps wider than Italy. Might have more to run, but trade worked very well and fairly quickly for what seemed like a low risk position.

I will be covering one of the stock shorts soon and likely IG18, but going to wait and see if the market will fade down to closer to unchanged. Will cover either the ES short at 1359 or the ND short at 2690. Whichever comes first.

On IG18, the target is 105, though may cut either Italy CDS or Spanish bonds if we get a good fade from here before European credit desks close for the day.

Current Trades Directional Trades

Short S&P 500 (ES), Short Nasdaq 100 (NDA/QQQ)

Short IG18

Short Italy via CDS

Short Spanish 10 year bonds

Long Greek 2023 PSI bonds

Current Trades “Basis” Trades

Short IG9 10 year and Long IG18 5 year

Long HY17 and short HYG