First Impressions

Pat Kenny, vice president of client relations, CQG – Transition from the floor to electronic trading, where are the opportunities?
JohnLothianNews.com

“Build those relationships because those relationships last forever.”

Dubbed “The Most Interesting Man in the World,” Pat Kenny, vice president of client relations at CQG, discusses his transition as a trader to his current role. After working as a water skiing instructor and bartender, Kenny found himself with an opportunity to become a runner on the floor of the Chicago Board of Trade. From there, Kenny took a position as a phone clerk and took customer orders. Eventually, he found his true passion of being involved with the sales side of the business. His experiences, combined with the network of several individuals helped lead Kenny to his current role at CQG. Kenny’s key message was that it’s not always what you know that may help lead to new opportunities, it’s also a matter of who you know that can help open up new doors and unlock different paths in your career.

Watch the video »

Quote of the Day

“It was a very high stress, very fearful trade. Once we recognized things started getting out of control, we shut it off immediately. It was like turning the clocks back to pre-electronic trading.”

Charles Comiskey in the story, ” Treasury Liquidity Squeezed as Dealers Shut Off Machines”.

Lead Stories

Buyers prepare for strategic bond fund resurgence as volatility returns
Julia Rampen – Investment Week
Diverging fortunes for government bonds and credit in recent weeks have prompted some fund buyers to suggest strategic bond portfolios could flourish again in the coming months.
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Euro Outflows at Record Pace as ECB Promotes Exodus
Candice Zachariahs and Lukanyo Mnyanda – Bloomberg
For European Central Bank President Mario Draghi, the price of a weaker euro to boost the economy and stave off deflation is a record exodus from the continent’s financial assets.
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Treasury Liquidity Squeezed as Dealers Shut Off Machines
Anchalee Worrachate and Susanne Walker – Bloomberg
As soon as Charles Comiskey saw what was coming, he turned off his machines. It was still early in the New York trading day on Oct. 15 and investors were already pouring into U.S. government bonds as global financial markets from Asia to Europe buckled. Because yields were falling so fast, Comiskey, the head Treasury dealer at Bank of Nova Scotia, realized that he ran the risk of being stuck with losses or unwanted inventory if his computers automatically generated quotes to buy and sell with customers.
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Swaps Beating Bonds Signal Corporate Debt Rally to Endure
Katherine Chiglinsky – Bloomberg
For those looking for signs that October’s rebound in corporate bonds can continue, look no further than the credit-default swaps market.
The cost to insure against losses on U.S. speculative-grade company debt has dropped to 69 basis points less than the yield premiums that investors are getting paid to own the securities, the biggest difference this year, according to JPMorgan Chase & Co. For investment-grade, swaps have fallen to 16 basis points less than the bonds they protect, about the widest for 2014.
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Billionaire’s Distressed Junk Bonds Post Biggest Returns
Eduardo Thomson – Bloomberg
Billionaire Alvaro Saieh’s SMU SA is delivering the biggest gains to junk-bond investors in emerging markets after the distressed supermarket chain reached a deal with banks to postpone a loan payment.
SMU’s $300 million of notes due 2020 have returned 8.8 percent since Sept. 30, when the Santiago-based company said the lenders gave it until June to make a $95 million payment that was almost three months overdue. The gain compares with an average 0.7 percent loss for speculative-grade bonds issued by companies in developing nations.
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Worried on low inflation, Fed seen offering soothing words
Jonathan Spicer – Reuters
The U.S. Federal Reserve this week will likely reinforce its stated willingness to wait a long while before hiking interest rates after a volatile month in financial markets that saw some measures of inflation expectations drop worryingly low.
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Judge rejects creditors’ bid for Argentine funds held by BNY Mellon
Reuters
A U.S. judge refused on Monday to require Bank of New York Mellon Corp (BK.N) to turn over to holders of defaulted Argentine bonds any of the $539 million the country deposited to pay creditors who participated in its past restructurings.
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Central Banks

Sweden’s central bank cuts rates to zero
Richard Milne, Nordic Correspondent – Financial Times
Sweden’s central bank cut interest rates to zero – a record low – as it stepped up its increasingly desperate fight against deflation.
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Switzerland Gold Referendum A Healthy Conversation
Kitco News (via Forbes)
Although it is unlikely Switzerland’s gold referendum will pass, one U.S. politician said the country is embarking on a “healthy conversation” regarding the role of its national bank.
Former U.S. Rep. Ron Paul, who is a strong proponent of gold-backed currencies, said in an exclusive interview with Kitco News the fact a referendum on gold reserves was triggered in Switzerland demonstrates that people around the globe are starting to question the reliability of fiat currencies.
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Federal Reserve to take away the punch bowl
Mike Peacock – Reuters
Unless it springs a major surprise, the U.S. Federal Reserve will call time this week on its program of government bond purchases, which at one point was pumping $85 billion a month into financial markets and the economy.
James Bullard, who heads the St. Louis Fed, has suggested that sticking with bond purchases for a few more months would give policymakers time to assess a deteriorating inflation outlook.
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Fed Touchy About Touching Rate Guidance – Real Time Economics
Pedro Nicolaci da Costa – WSJ
The Federal Reserve’s main policy decision this week comes down to a handful of key words that offer a sense of how much longer central bank officials intend to keep short-term interest rates near zero.
Fed policy makers meeting Tuesday and Wednesday are likely to debate whether to keep the language in their previous policy statements pledging to keep their benchmark rate near zero for a “considerable time” after their bond-buying program ends.
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E.C.B. Stress Tests Seen as Bolstering Confidence in Banks
Peter Eavis – Dealbook – NY Times
If five years is an unwisely long time for a person to skip a proper checkup, it is an eternity for a $40 trillion banking sector displaying many signs of ill health.
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BoE’s Shafik Says Fixing Markets ‘Essential’ to Restoring Trust
David Wighton And Jason Douglas – WSJ
British regulators have launched a review of practices in the wholesale financial markets that they hope will result in industry-led changes in the way the markets operate on a global basis.
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Currencies

Ruble Weakens to Record on Concern Russia to Expedite Free Float
Vladimir Kuznetsov – Bloomberg
The ruble weakened to a record for the fifth day on concern Russia will quicken its move to a free float after more than $20 billion of interventions this month failed to halt the depreciation.
The currency slid 0.4 percent to 47.6089 against the central bank’s target dollar-euro basket by 3:37 p.m. in Moscow, bringing this year’s decline to 19 percent. Ten-year government bond yields approached five-year highs as the Finance Ministry said it was scrapping its third straight debt auction.
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LedgerX Hopes to Establish First U.S.-Regulated Options Exchange for Bitcoin
Yuliya Chernova – WSJ
A new startup out of New York called LedgerX LLC has recruited big financial-industry names to its board of directors and raised venture funding from Lightspeed Venture Partners, Google Ventures and others to add a dose of legitimacy to the bitcoin market.
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Nasdaq presses on with plan to clear forex derivatives in Europe
Philip Stafford – Financial Times
Nasdaq is to press ahead with its long-touted plans to clear some foreign exchange instruments in Europe as local regulators finalise mandatory rules for trading off-exchange derivatives.
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Mako FX Aquired by Xenfin; Jones and Patten Depart
Profit & Loss
Xenfin Group has acquired the London-based Mako FX Partnership, including the Liquidity Pool platform established under Adrian Patten and Simon Jones
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BAML Adds FX and Equity Options to Trader Instinct
Profit & Loss
Bank of America Merrill Lynch (BAML) has recently added FX and equity options to its Trader Instinct platform
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Gold

New London gold benchmark to go live in early Q1 2015 -LBMA
Reuters
A new electronic gold price mechanism is expected to be in operation early in the first quarter of 2015, replacing the century-old gold benchmark, the London Bullion Market Association said on Monday.
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Hong Kong Gold Trade Losing Luster – WSJ
Biman Mukherji And Huileng Tan – WSJ
Hong Kong’s role as the gateway for China’s vast gold imports is dimming as Shanghai seeks to snare more of the trade.
For years, Hong Kong has served as a gold-trading hub for China because of its vast bullion vaults and heavy buying of jewelry by visiting mainland tourists. But Shanghai is now looking to import gold directly from the rest of the world, bypassing Hong Kong. It has opened its own vaults and is trying to steal more of the trade in yuan-denominated gold futures.
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Caution Urged For Those Seeking Gold Bargains
Isabella Zhong – Barrons
Once dismissed as a “barbarous relic” by John Maynard Keynes, gold has been on the receiving end of some market barbarity in recent months.
The gold price has fallen nearly 11% from its March high of US$1,379 an ounce as expectations of gathering momentum in the US economic recovery and, more importantly, further gains in the US dollar have erased the luster from the precious metal that notched up an impressive 12 consecutive years of gains up until 2012.
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Building the SNB a cross of gold (or an SWF?)
Financial Times
Tbh, we thought this one would just go away. But no, on November 30 there’s to be a vote in Switzerland which, if won, would shackle the Swiss National Bank by forcing it, amongst other things, to hold at least 20 per cent of its assets in gold; to repatriate any gold stored abroad; and to refrain from selling any gold in future.
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The next big market shock can come from ‘Save Swiss gold’ movement
Business Standard News
Love for gold was supposed to be an Indian affair but that was before the Chinese came in and overtook Indian annual purchases. Even this will now change from November 30, 2014 if the Swiss have their way.
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