Hey guys, so I'm starting my stint as a SA soon with my long term goal being to work on the buy-side at a Global Macro HF. I was just curious as to how these three desks do in terms of getting into global macro.
I know that LatAm rates does pretty well, but what about credit? I've read somewhere that trading money market products are great for global macro, but would a repo desk be better than say trading interest rate derivates or just straight treasuries? And lastly I have no clue about government agency debt.
Thanks for the help guys.
It's tough...
Personally I would avoid LatAm credit (or LatAm anything, really). It's a small and very idiosyncratic space and, in your situation, it's probably way too early to specialise. Agencies (assuming we're talking about US) are better and offer you exposure to all sorts of "adjacent" mkts, e.g. USTs, mtges, etc. One issue is that the future of this mkt is somewhat uncertain and activity is definitely less than before the crisis. I guess this leaves repo, which, IMHO, is really the best choice for someone starting out. It's a mkt where the rubber meets the road and, if you're so inclined, you can really gain great experience with bond and funding mkts, which are the inglamorous foundations of pretty much everything else. Here's an interesting factoid: among the big bank CEOs and ex-CEOs there's a large number who started as repo guys, e.g. Dick Fuld, Bob Diamond, etc. Not sure if this is gonna inspire you, exactly, but there you have it.
Thanks for the advice Martinghoul. Yea I'm talking about US agencies and right, I've heard similar things about repo trading. That's interesting about LatAm though, I've generally heard that EM is a pretty good space for Global Macro. Would love to hear more opinions.
bump
What do you mean exactly by LatAm Credit? Because in some firms EM Credit desks trade govvies from EM countries, it's called Credit because they are more of a credit product than a rates product.
Repo trading is a great foundation, and it's probably one of the desks where you will learn the most, however it can also be risky. Many repo desks trade for funding, PnL is not their first concern. Or they have some guys trade for funding and some others for PnL. They also depend on more external factor than other traders, which combined with the fact that they trade a lot less risk make them a different kind of trader in which HFs might not be interested, or at least not for the road to PM (some of them go to funding roles in HFs). On the other hand, if you are at a good firm and you are good enough, you'll be allowed to not follow these, and if you manage to really understand the repo market you'll probably have a better understanding of macroeconomics than anyone else on a sell-side trading floor. Repo markets are literally the foundations of the financial system. Trading repo in regular times can be boring as fuck, however during periods like Lehman, huge credit crunches or when corporate activity spikes it can be the most interesting place on the floor. So IMO it's risky, but if you are excellent it can work out great for you.
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