Hi all - I have an upcoming interview for a rates sales position. What kind of questions could I expect? The job description says "must be extremely comfortable with bond math" What kind of questions could they ask regarding this? Thanks!
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Different bonds pricing calculations should be expected.
Different bonds pricing calculations should be expected.
first, know the yield curve(esp the US treasury) at the back of your hand (go to bloomberg and read their yield curve construction pdfs). If you understand this, you will probably be miles ahead of the competition.
Next, have at least 2-3 good trade ideas (on government bonds preferably, easier to research and more to talk about). If you know common strategies like flattener, steepener, butterfly trades, go with that. if not, stick to directional trades(simple long or short) and explain why & how you would or wouldnt hedge.
Lastly, know your client. this will help you sell your ideas and at the same time apply the bond math you have learned (in addition to any projects you might have done)
They probably wont ask you to value a swap but you should know common terminology like discount factors, differences between a bond and swap curve, how to use CCS or IRS to hedge an existing trade.
good luck!
thanks alot! This is helpful. I am on vacation now. Do you happen to know if this is available online?
Everything is available online if you look hard enough. Yield curve shape, flatteners, steepeners, etc should be easy to find. Additionally, there's tons of PDFs out there on swaps that you could look for. The hardest part will be formulating your own view on things and figuring out how to make a case for a trade. That isn't something you can really teach, you sort of have to follow the markets and develop an opinion. Then again you're interviewing for sales so I guess they wouldn't mind the idea of you disseminating someone else's research and using that for your trade idea, since that's essentially what Sales does.
Hi, where specifically can I find the pdf? thanks!
All stuff mentioned above is fine. If they are being specific about bond math, know it inside out no doubt.
But remember to go with the flow, if the interviewers aren't too bothered about technical, just avoid talking math. Sometimes they just want to make sure you're a cool person to hang out with, really.
Balance it well and be cool and interesting (stuff you do outside work etc). But if they press you on math part, show them you know your stuff.
Rates is macro so have the big picture in mind. Should be able to talk about the world covering the US, Europe and Asia.
Interest Rate trade ideas: interviewing for interest rate sales position (Originally Posted: 09/26/2010)
hi,
Will be interviewing for interest rate sales position. After browsing through the website, I found guilt/UST, bund/UST and flattening yield curves (essentially longing 10 year and 30 year Treasuries) are some nice trading ideas.
1)Any other trade ideas for interest rate? Would FX / Credit products be an option as well? (Not a big fan of equity) Will try to stay away from it.
2)Unlike stock pitch with P/E or other pricing method, how do you pitch an exit price for your interest rate trades?
thank you,
being long 10s and 30s by itsellf is not a flattener. A bull flattener would be long 10s/30s, short 1y/3y/5y....Or something like that. Then you would need rates on the back end of the curve to go down by more than rates in the front end of the curve and you make money. I think.
Interest rate swaps, cross currency swaps and bond forward calculation as well as simple options strategies. These are the basic that you must know.
Forward Starting receive fixed swap, basically having a flattener position on, ideally find the part of the forward curve that has the biggest rolldown effect between the forward start and the equivalent spot starting swap
Combination of (Long 10y UST cuz Fed is on the bid)+ (Long USDJPY spot cuz BoJ is on the bid) + (Short 10y JGBs) seems to be popular and crowded.
receive 1yx1y USD fwd IRD at 1% and pay around 85bp
If you believe in QE2 you could receive 6m or 1y OIS and hope Fed for feds trading around 19bp with little upside risk unless you think US can hike rates anytime soon.
if you really want to get fancy go to ECB website and study their repo operations and construct a receiver of steepener around the dates where liquidity is drained out from system. Next one is Sep 30 where 250bio eur is taken out and eonia is likely to go higher.
Rates Sales Interview Questions for Analyst/Associate level (Originally Posted: 03/05/2014)
Hi,
What are some interview (behavioral and technical) questions to be prepared for Institutional Rates Sales for Analyst/Associate level?
Many thanks.
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