Bond Trading - Page 3

CrushinFelt · #21 08-22-2007, 09:01 AM

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Personally, we are not out of the woods yet. I think certain Hedge funds that are yet to mark their holdings to the market will more than likely become insolvent. In other words it will get worse before it gets better. There is just a complete buyers strike in certain parts( ie. pretty much anything other than treasury's) of the debt markets. Bids are consistently getting lowered to find buyers.

Till tomorrow........

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This is also what I was getting at with my intial explanation for why I made the trade on the Countrywide bond. I didn't word it properly, but the gist of my trade (more properly laid out now) is the following:

Cuontrywide's situation (bond prices), though undoubtly a bit gloomy, has been influenced by more than just their credit worthiness. I believe the hype about them has driven people away from their bonds (thus increasing the yield as people want to sell them off), I believe that the Fed lowering rates will help to ease the outlook on countrywide (bringing the bond prices back up), and then Countrywide's situation will improve (also bringing the bond prices back up.

I definitely explained things differently earlier but this wording is much better. Anyways, cross your fingers for my first bond trade!

DcifrThs · #22 08-22-2007, 01:29 PM

[ QUOTE ]
[ QUOTE ]
Personally, we are not out of the woods yet. I think certain Hedge funds that are yet to mark their holdings to the market will more than likely become insolvent. In other words it will get worse before it gets better. There is just a complete buyers strike in certain parts( ie. pretty much anything other than treasury's) of the debt markets. Bids are consistently getting lowered to find buyers.

Till tomorrow........

[/ QUOTE ]

This is also what I was getting at with my intial explanation for why I made the trade on the Countrywide bond. I didn't word it properly, but the gist of my trade (more properly laid out now) is the following:

Cuontrywide's situation (bond prices), though undoubtly a bit gloomy, has been influenced by more than just their credit worthiness. I believe the hype about them has driven people away from their bonds (thus increasing the yield as people want to sell them off), I believe that the Fed lowering rates will help to ease the outlook on countrywide (bringing the bond prices back up), and then Countrywide's situation will improve (also bringing the bond prices back up.

I definitely explained things differently earlier but this wording is much better. Anyways, cross your fingers for my first bond trade!

[/ QUOTE ]

just be careful here: a few things you should know that you may already

1) the fed may not lower rates so if you are counting on that, and the market is counting on that, the price of your bond may fall as the priced in rate cut doesn't happen (if in fact it doesn't)

2) the fed is absolutely loath to lower rates right now and will do every creative thing in its power to not lower the fed funds rate. but, if the outlook for the economy becomes exceedingly grim, the fed will act and lower the rate (highly unlikely by 50bps imo)

3) the IMF released thoughts on the matter saying the global economy will be affected. thinking that the economy will not be affected is naive and overly optimistic. the degree and extent to which the economy will be affected, though, remains to be seen in their eyes.

i think that the fed will not cut rates 50 bps and will only do 25 if absolutely necessary. if markets stabalize between now and sept. 18th, fed won't cut. thats just my opinion and the market completely disagrees at this point as fed funds futures trade above 95 (100-fed funds rate at maturity = price).

just giving my thoughts.

Barron

CrushinFelt · #23 08-22-2007, 06:14 PM

Can I get a Hoo-Hah two times Tuesday?!

Bank of America to Invest
$2 Billion in Countrywide
By VALERIE BAUERLEIN
August 22, 2007 5:47 p.m.

Bank of America Corp. is making a $2 billion equity investment in Countrywide Financial Corp., the embattled mortgage giant, according to people familiar with the situation.

Bank of America will purchase $2 billion worth of preferred Countrywide stock yielding 7.25%, and that can be converted into common stock at $18 a share, those people said.

CrushinFelt · #24 08-23-2007, 09:03 AM

Got a quote this morning, the yield is down from almost 11% (where I bought it, it was yielding over 12% at its low) to just over 5%. Thats about a price change from 84ish to 94ish.

DcifrThs · #25 08-23-2007, 10:41 AM

[ QUOTE ]
Got a quote this morning, the yield is down from almost 11% (where I bought it, it was yielding over 12% at its low) to just over 5%. Thats about a price change from 84ish to 94ish.

[/ QUOTE ]

XPRT!

CrushinFelt · #26 08-23-2007, 01:10 PM

[ QUOTE ]
[ QUOTE ]
Got a quote this morning, the yield is down from almost 11% (where I bought it, it was yielding over 12% at its low) to just over 5%. Thats about a price change from 84ish to 94ish.

[/ QUOTE ]

XPRT!

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ZOMG I SHOULD START MY OWN FUNDDDDNDNDNDNDNDND

CrushinFelt · #27 08-23-2007, 01:11 PM

P.S. Just bought another bond ;p

gogogo CIT!

NajdorfDefense · #28 08-23-2007, 01:42 PM

the spread on most bonds for size you are likely trade is going to be egregious compared to stocks. Not that you can't make money of course.

tw0please · #29 08-24-2007, 03:35 PM

CrushinFelt, just saw this thread. V. nice call on Countrywide's default being overstated in the short-term. I had similar thoughts, but I'm just a junior analyst with no real money :P

superadvisor · #30 08-24-2007, 04:29 PM

Can somebody point me to where I can learn more specifically about the type of countrywide bond crushinfelt bought? For example I don't understand if his rate is locked in, how long the term is, when he will be able to get his money out or where the risk is involved? Does he only lose money when CFC goes bankrupt?