Advice appreciated!
I’m a new hire analyst / trader (straight from non-target UG, 5-7 months in) working for a multi-strat focused on structured products
Given the interplay between structured products and rates, we do a lot of rates trades for hedging purposes. We often express directional views on levels, spreads etc. through rates instruments, so long as they fall within our risk parameters. Think it’s extremely fascinating and find myself reading / learning more about rates (whether RV or macro) in my free time.
Problem is, I was hired to focus on a specific and very niche subsector of structured products (I come from a non-target background so I didn’t have the pick of the litter, otherwise I would have picked rates ha)
I somewhat enjoy the asset class, but it’s very easy to pigeonhole one’s self over time if I don’t expand my horizons. Any advice for someone like me, who wants to ultimately take a stab in rates / see whether it’s for me, but does not necessarily have the sell side training for it?
Doing everything that I can to get up to speed on the practical skills (math, coding, reading all the books etc.), but I also understand that I need to perform in the asset class that I was hired for…
Plus side is that boss is very reasonable and gives people the opportunity to pivot if you have the competency - just a question of how to play this out over the course of (hopefully) multiple years?
Think you answered your own question within your question. If you perform well in your current opportunity, you may have the opportunity to move over to rates. Agree stay sharp on what you’re passionate in, but you also need to equally go all-in on your current asset class to ensure you get the opportunity.
By the way what subsector do you cover?
Thanks! Was initially concerned I'd fall behind the curve given that I don't have the requisite sell-side experience + my day-to-day is spent covering my asset class. But have to play the long game here.
Re: my asset class - can't disclose here since only a handful of people cover it in my space so don't want to dox, but spreads are wider and definitely not as liquid as your vanilla agency mortgages.
What books are you reading?
Working through Tuckman's Fixed Income Securities at the moment. Read through the "Understanding the Yield Curve" series by Antti Ilmanen when he was at Salomon. Recommend that as a starter - total of seven short papers (to my knowledge) and goes over the basics of forward rates, convexity, term premia, curve trades etc.
Once I'm finished w/ Tuckman I'd ideally move on to books that cover relative value. Have heard good things about Fixed Income Relative Value Analysis by Christian Schaller and The Treasury Bond Basis by Galen Burghardt.
Some other books I would recommend...
- The Repo Handbook by Moorad Choudhry (Repo is a big part of the bond basis so you should have a decent understanding of it to understand basis trading.)
- The Treasury Bond Basis (you already mentioned it but I want to emphasize it, its essentially the bible. Moorad has a bond basis text as well but I believe his is more focused on gilts than this one.)
- Inside the Yield book (Third Edition)
- Macroeconomics for Professionals (this really depends on what your background is)
- Interest Rate Swaps and Other Derivatives (just skim this one tbh its dense as all hell.)
Thanks for posting the recommendations - will check all of them out... any sequence you'd recommend to these? Which to read first / spend more time on etc.
Separately - is Macroeconomics for Professionals a good read for someone w/out a strong background in macro? How much prereq knowledge would you need to get through that one? Have heard good things.
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