A fascinating story on Bloomberg.com – Five Strange Things That Have Been Happening in Financial Markets – provides a rundown of unusual occurences in all of the markets happening right now.
These kinds of rare happenings are the reason why you need training and support before embarking on trading of any kind, whether it be in the Forex market, or with stocks and options — and why you’ll want to choose a program that stays current with conditions in the markets.
Most education providers don’t say it, but weird things happen all the time for investors, but that isn’t a problem if you have experts dealing with the same unusual conditions themselves.
The 5 strange things mentioned in the article
Negative swap spreads — as reported in the story: “At issue is the fact that swap rates—or rates charged for interest rate swaps—have dipped below yields on equivalent U.S. Treasuries, indicating that investors are charging less to deal with banks and corporations than with the U.S. government. Such a thing should never happen, as U.S. Treasuries theoretically represent the “risk-free” rate while swap rates are imbued with significant counterparty risk that should demand a premium.”
Fractured repo rates — “While there used to be little distinction between the rates at which counterparties raised money against their U.S. Treasury collateral, there is now an increasing divergence.”
Corporate bond inventories below zero — “Analysts at Goldman Sachs made waves this week when they highlighted the fact that inventories of some corporate bonds held by big dealer-banks had gone negative for the first time since the Federal Reserve began collecting such data. That means big banks are now net short corporate bonds with a maturity greater than 12 months equivalent to $1.4 billion, bucking the longer-term trend of net positive positions.”
Market moves that aren’t supposed to happen keep happening — “Much of Wall Street runs on mathematical models that abhor statistical anomalies. Unfortunately for the Street, such statistical anomalies have been happening more frequently, with short-term moves in many assets exceeding historical norms.”
Volatility is itself more volatile — “Whatever one’s opinions of the stock market selloff, you’d be hard-pressed to argue that global markets were more stressed in August than they were during the depths of the financial crisis. Instead, the vacillations in the VIX underscore a post-financial-crisis trend that has seen volatility explode into its own asset class.”
A popular opinion expressed in this article is that “May you live in interesting times” is often considered a curse. It doesn’t have to be, if you align yourself with analysts and experts who have already seen and profited from interesting times in the past.
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