Traditional Bond Traders Overrun By Quant Traders

Once again, the ability to code is trumping all other skills, again lending credence to the “learn to code” joke that came off as so harsh to the liberal social media elite that it wound up getting people banned from Twitter.

But the adage is holding true in the bond market, according to Bloomberg, where quants are now striking it rich with the ability to code. The bond market is getting “wired up by systematic players” and firms are scrambling to scoop up the best talent.

Hedge funds are stealing each others’ talent and trying to entice employees with robust compensation packages. For instance, credit-quant clients at Selby Jennings in London are offering annual compensation of $400,000 to a Ph.D. graduate with five years’ experience as a desk strategist.

Read the rest of this article over on ZeroHedge.

Storm Clouds On The Horizon

I’d wager that the majority of retail traders chose to listen to the onslaught of bearish siren calls peddled in the MSM over the past two months, once again causing them to miss out on yet another massive push to the upside.

As we’ve now advanced all the way into new all time highs you may wonder if at least an obligatory shake out may be in sight. Let’s see what my market momentum charts have to say about it.

Let’s start with Mr. VIX – despite all time highs the 12 mark has yet to be broken and IMO the bulls require a drop < the 11.8 mark in order for the rising trendline above to be broken.

There are of course no iron clad rules that were handed down to Moses about any of this. But it has become clear now that we have built a new IV base over the past two years and investor confidence is needed in order to abandon the high volatility market regime that has reigned since early 2018.

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Markets And Volatility

By all definitions the past two years have been pretty challenging to many retail traders and not surprisingly the exhaustion I sense in the comment section is palpable. A lot of what has transpired can be attributed to a marked increase in realized volatility which over time has contributed to a now permanently elevated baseline in implied volatility.

I’ve covered that phenomenon in my various long term market updates but today I would like to take a step back and hopefully squash a number of misconceptions about market volatility and also address how it may affect your trading reality.

However, people talk about ‘volatility’ all the time and often mean completely different things. So before we move any further we need to establish a clear definition of what volatility is and how we can measure it. To that end let me to walk you through the basics.

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