Rates RV to Macro Rates Pod

Hi guys, title explains it basically. I spent the last couple years on a rates RV team focussed on G3. However, I will now be transitioning to a team at a different fund that is more macro rates than the micro RV framework I am used to. While the product space will be identical, idea generation will likely look different. For e.g. While at my current role I might be trading 2yr spreads vs 3yr spreads, the new shop is much more likely to just take a directional view on spreads and optimize for part of curve.

There are probably many such differences like this that I am not fully aware of and I appreciate that the RV vs macro is not binary but rather all macro shops likely involve some RV. On the RV scale I'd say my current shop is 8/10 RV while the new role would be more like 5/10. i.e. they would not punt on 10y yield, but might trade some distribution on fwd 2s10s. Would be great to get your guys advice on how best to prepare myself for this transition and other factors I should be aware of.


Transitioning from a Rates RV focus to a Macro Rates Pod involves a significant shift in perspective and strategy. Here are some key points to consider based on the WSO Dataset:

  1. Understand the Macro Perspective: Macro rates trading requires a broader understanding of global economic indicators, central bank policies, and geopolitical events. It's crucial to start following these closely if you haven't already. This will help you understand the directional moves in the market.

  2. Research and Education: Dive into resources that cover macroeconomic theories and their impact on interest rates. The WSO Courses and Academy offer materials that can sharpen your understanding of macroeconomic indicators and their relationship with rates.

  3. Modeling and Analysis: While you might be used to specific RV models, macro trading often involves a different set of models to forecast economic conditions and their impact on rates. Familiarize yourself with these models, focusing on how macroeconomic indicators influence different parts of the yield curve.

  4. Idea Generation Shift: Moving from trading spreads between specific maturities to taking directional views on the curve requires a shift in idea generation. Start practicing by analyzing current economic conditions and predicting their impact on different parts of the yield curve. This will help you in optimizing trades for the part of the curve that is most likely to be affected.

  5. Risk Management: Macro trading can expose you to higher volatility and shifts in market sentiment driven by global events. Enhance your understanding of risk management techniques that are more suited to macro trading. This includes diversification strategies and dynamic hedging.

  6. Networking and Mentorship: Connect with professionals who have experience in both RV and macro trading. Their insights can be invaluable in helping you understand the nuances of macro trading. The WSO Networking Guide can be a great resource to build and leverage your network effectively.

  7. Stay Informed: Keep abreast of global financial news and analysis. Understanding the narrative behind market movements is crucial in macro trading. Utilize the WSO Forums to stay updated and engage in discussions that can provide deeper insights into macro trends.

  8. Technical Skills: Brush up on your technical skills, especially those related to quantitative analysis and programming. These skills are increasingly important in macro trading for developing trading algorithms and analyzing large datasets.

Remember, transitioning to a macro rates role from a rates RV background will require time and patience. Be proactive in your learning and open to adapting your trading style to fit the macro perspective.

Sources: Q&A: Rates & Macro Research/Strategy - Career Path, Technical Topics, Education, etc., Macro vs Rates RV, Q&A: Non-Target School to Portfolio Manager at a Top Hedge Fund – 6 Years Out of Undergrad, Q&A: Former BB Rates Trader - Now a prop trader, Macro: Rates and FX

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My entire buyside career has been at a place like the fund you’re going to, based on your description, so take my opinion with a grain of salt.

I don’t think it’ll be significantly different overall.

Trade sizing will likely be different. 2y and 5y spreads typically move more individually than the 2s5s spread curve/box, so you can/should be smaller.

Taking macro bets can be fun, especially if you don’t have to do it all the time and it seems like positioning/sentiment is at an extreme. We don’t do this often, but sometimes the right answer to a trade expression is just to be a bit smaller in a blunt instrument rather than trying to be too cute.

Every shop is different, but I think there’s a good chance your new shop might be more “fundamental” than your previous one. I.e. tracking net supply, demand trends, maybe looking at bank balance sheets/call reports, thinking broadly about what drives funding rates and what the implications of that are.


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