STIR Trading

May I ask, I am trying to figure this out (newb) -- so STIR futures (Eurodollars for example) are traded on the STIR desk. 
Then, if I am assisting on a repo and STIR desk, UST cash trading, I am working on repos (gov't securities) and STIR futures (like eurodollars) using UST cash? 

12 years later, did it end up being a very quant role? Curious to know myself.

Thank you!

brotherbear:

Generally, money markets (loans and depos) are not traded on STIR desks. Some banks combine the two into one large short rates desk. Some banks have a 'balance sheet management' team that does money markets. Some have FX desks run money markets. It really just depends on the bank.

Also, you don't want to trade money markets. It sucks--trust me. STIRs can be interesting, but they have a smaller mandate than the long-dated swaps and options guys (2-50 year on a USD desk). You only really do money markets as an entry point to the firm if you can't get something else. If you like rates, you want to trade swaptions, then cross-currency swaps, then long-dated swaps, then STIRs, then govies, then supra-sovereigns, then munis, then money markets.

Normally, I wouldn't even include munis. Historically, only the dregs of the G10 desk would work in munis, so they tended to be bad traders. Now, munis are in vogue, so those desks are attracting some better talent than they did in the past, but the bosses are still weak (as they are legacies from the old days). The same is true of money markets desks. The people on those desks (with a few notable exceptions) are not as well respected as the main rates desk.

You're welcome.

BTW, the hierarchy I gave you is also the stratification for remuneration by desk within the rates space.

I realise this post is over a year old; I'm thinking about starting to trade STIR futures on a PA so I've been digging through some old threads. There is some good content in this thread, so forgive the bump.

Bondarb wrote that the best place to start on the sell side if you want to eventually become a global macro PM is repos. Bearflatten wrote that repos is the ideal place to start if you wish to eventually trade treasuries. So I am curious why you think money markets suck so much. Also curious why you rank treasuries below STIR. Was your post written strictly from a sell side perspective?

Thanks

philgorman:

Hello fellow monkeys,

Long time lurker, much rarer poster, but I would appreciate some direction.

Background: Met with an MD in FX Forward Trading the other week. I push, politely, about hiring and he proposes that I start sending him trade ideas. Sent him two last week and both made money.

I am basing my trades on my opinions regarding monetary policy, macro outlook, etc., and sticking to FX. However, I would like to incorporate more market-based indicators and would like to start proposing rates trades. I would have asked him this myself when we met, but the meeting was shorter than anticipated and I really don’t think I should be e-mailing him about this now as he is probably really fucking busy. Could any of you help? I have access to a Bloomberg terminal and have a data model built for all G7 yield curves and OIS. What else could be useful? I think there is some pretty good opportunities to propose some profitable stuff to him (like 2-5 times a week) and this could probably lead to employment, maybe even a spot on his desk (although who knows where the world will be in one month).

Note: Searched “rates”, “forwards”, “fx”, “[rates/fx/forward] trading” and have pretty much exhausted the engine and my desire to continue searching it until the weekend.

Appreciate any info/direction you can give!

Sounds not realistic for me, an MD in FX Trading asks you for trading ideas ???

Most MDs in Trading were traders before they accepted their MD status, they do not have to ask someone for trading ideas. Or do you want to tell me that people like Flamand or Sze are asking their analysts or whatever for trading strategies ?

Its not as if he is asking me for ideas to help him. By far. The way he put it is that it is tough to make a recommendation based on a 20 minute coffee chat, but this is a way that he could. I would assume that he has a certain expectation on what I would send and if I could exceed those expectations then all the better for me.

Does that help clarify things?

I dont really have any ideas for you but make sure to not just send a trading idea, but a trading plan, so make sure to include the sizing, stop loss (both price and time), entry and exit strategy.

Also look to hedge out as many irrelevant risks as possible, and try to look for situations where a hedge still allows upside but protects on the downside (a correlation break basically).

You prob already know all this so just disregard the post in that case.

If you want to do a rates play, do an FX Swap. Plenty of possibilities with the meltdown of the last week, FOMC tomorrow, etc.

If you don't know rates, don't do rates -- one of those products that seems simple but is very easily to look like an idiot.

Even a simple tsy curve trade can be make you look like an idiot if you don't know what you're doing.

Yea, the more I read on it the more I'm thinking its not possible. Oh well, FX is better than nothing.

Our STIRS desk made a killing over last two weeks. I trade long end rates, got killed.

try learning a little more about the way they trade STIRs, or the way others trade STIRs. Basically the more you know about the product, the more ideas will come to your head. people who trade STIRs often also trade TED spreads or at least follow them. theres a lot of opportunity. maybe this guy is testing how hard you can look/find this stuff out on your own and also think about it without formal training in the discipline.

i traded them for 8 months before moving to long end. PM me if you want more insight. your situation is not uncommon.

now we're talking!

Whatever you do, don't say its impossible for LIBOR futures to imply negative rates haha.

? You traded STIR for 8 months and then went to the long-end? That makes zero sense.