Linear Rates / US Rate Swaps
New to the industry and trying to learn more about the fixed income side of trading. Heard a lot of great things about non linear rates / rates vol, curious if anyone have any color on linear rates and rates swaps trading, hours, the work, exit pops etc, cheers
Linear rates trading typically involves non-option-related products such as cash treasuries, TIPS (Treasury Inflation-Protected Securities), interest rate swaps, and futures. These products are considered "linear" because their pricing and risk profiles are straightforward compared to the more complex, non-linear instruments like options or structured products.
Key Insights on Linear Rates and US Rate Swaps Trading:
Products Traded:
Nature of Work:
Hours:
Exit Opportunities:
Learning Resources:
Linear rates trading is a critical part of fixed income markets, offering a mix of technical and macroeconomic challenges. It’s a great area to build a solid foundation in trading and market dynamics.
Sources: Insights on Fixed Income Trading, https://www.wallstreetoasis.com/forum/trading/qa-1st-year-bb-london-rates-trader-taking-your-questions?customgpt=1, Hedging Choices (Experienced Traders), Macro: Rates and FX, Q&A: BB Flow rates trader
both are dead. hours around 6:45 - 5:15. For linear you trade a specific part of the curve and try to find RV trades. Swaps trading the spread. exits for both are anything in macro hedge fund.
Are exits real or hypothetical
very real. high turnover to hedge funds. large banks hire 1 to each every year.
Why are both dead?
both have become riskless in their trading.
You’re only real exit is going to be macro funds/pods, and really only going to be at the Director to PM level where that becomes attractive. Junior level at those places offers worse risk reward profile than staying at sellside imo. Pays going to be like 70% of IB equivalent level. Obviously more room for upside but again not going to be the case until senior VP/Director. Also not going to be risk on style of trading unless at GS maybe (ironic cuz GS also took huge losses in rates during the start of the Iran conflict). Also at risk of automation. Recommend vol products/credit.
Very helpful thank you. What does rates vol / credit provide that makes them more attractive?
Do you have any color in to what comp looks like if you move to the buyside at a junior level? Thought that the buyside paid better than BBs for macro even at the junior level.
Depends whether ur in STIR/Cash voice trading or purely Algo trading
bump
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