Bond Spreads/Interest Rate Differentials Charts?

Bond Spreads/Interest Rate Differentials Charts????

Especially after reading Kathy Lien's, Day Trading the Currency Markets, I am searching for some free bond spread and interest rate differentials charts for the spot market etc..

Examples- Kathy shows how interest rate differentials can be a leading indicator. An increasing interest rate on the currency you are long should see positive appreciation for said currency.

You can compare 10 year goverment bond yields between 2 crosses.

Example in book(pg. 153): Aus 10 year gov bond - 5.50%
Us 10 year gov bond - 2.20%

350 basis point advantage for Aus- You can chart this data in excel

There is also the famous commodity chart of a barrel of oil charted v.s. the Cad/Usd. It would be a inverse relationship for Usd/Cad

Does anybody have any idea of a website that has these charts or anything similar. In the book Kathy mentions that you can put the data into a chart in excel. I am just hoping that with the exploding popularity of the spot forex market that these charts have been created and displayed on the internet.

TY- M Rippy

Hi Rip,
These deviations might be useful on larger TF, but not on smaller ones. I guess you know that or you won't be asking.

Do you expect to off this information or just use it for confirmation?

Merry Christmas

I would use it more for position trading. I also would update at the start of the week- weekly checklist etc..

I also have several people, non-traders, possible investors, that I need to show them information so they can get a overall picture of the forex market.

I also am looking into carry trades, a friend was asked me if I could set her up with some carry trades to diversify her portfolio. While looking over my forex books on carry trades I have come accross fundamental stuff like the charts stated.

When push comes to shove- I do not think I could convince myself to open up a trade based on a bond yield or intrest rate differental chart!

I am looking for any information about these charts and anything on carry trades etc..

TY, M Rippy

PipRip,

Ah, I see what you're doing. I would say that if you work trades off of bond yields it would possilble, but a lot of work 'cause instead of having to follow just on market(4x) you would have to closely follow two markets ( 4x and bond). Following the bond market as it relates to the 4X is not always a science. The relationship between the two exists, but in certain periods there appears to be no correlation. Of course, to be thorough in ones research I would think that keeping a pulse on the bond markets of both sides of a currency pair would be necessary.

Is it true that the big forex tradehouses that make a profit on bond or interest differentials are still getting the core of their profits from regular trading in the forex? I would think that they use the differential trades to just squeeze a little extra profit out - kinda like icing on the cake.

Good luck. Thanks for listening.

I'm starting to track the interest rates with Bloomberg news, reading the bonds news and the currency news. Amazing how recently the dollar is gaining the same days that bond yields, certain years expirys rise, like the 3 week high on Friday coincides with the $ dropping below EUR/USD 1.31. Though reading Investors Business Daily for Friday indicates that the most hawkish member for the Fed is due to take a break from the Fed for a couple of years. Fascinating articles from this or upcoming Monday which actually point to $ weekness in the next couple of months if IF the Fed becomes happy with the current low inflation levels and indicates that lowering rates would be advisable for the US economie's sake, not for the $'s sake.
My guess to your question is finding charts, and companies that trade the stock, futures and forex,that cover bonds futures, stocks- perhaps esignal fits the bill.
good trading to you

3/16/2007 4:18:06 PM

Drivers pay attention to yellow Yield signs on the road, because it's dangerous if they don't. They could merge right into 18-wheelers roaring down the main road. The same holds true for the financial world and the economy. We've got to pay attention to Inverted Yield Curve signs, because it's dangerous not to. We could get run over by a recession. Why? Because history shows that recessions follow a period when yields are inverted, that is, when short-term interest rates are higher than long-term rates.

Although former Fed chairman Alan Greenspan recently gave recession a one-in-three chance before the end of the year, a recent Bloomberg article (3/12/07) pointed out that the "probability the U.S. economy will shrink for two quarters has risen to 50 percent, according to a model created when Greenspan ran the Board of Governors of the Federal Reserve System. The formula is based on differences in yields on Treasuries."

Well, what do you know? Seems that the Fed's economists are worried, too, even more than their former boss is. The two Fed economists who designed the study are willing to bet that the inverted yield curve is a strong indicator of recession. According to Bloomberg, the Fed economists' study said, "Treasury yields are a better predictor of recessions than stock prices. That's because relatively high short-term rates slow the economy while lower longer-term rates reflect the outlook for weaker growth and inflation, they wrote."

Bob Prechter draws conclusions from the inverted yield curve, too, and in his most recent Theorist, he includes a chart that's worth a thousand words – although we've included about 275 words to go with it.

* * * * *

Excerpted from The Elliott Wave Theorist, February 21, 2007, by Robert Prechter

http://www.elliottwave.com/images/ma...2EWT_Fig-6.gif

Inverted Yield Curve
Short-term interest rates have been above long-term interest rates—as measured by 3-month vs. 30-year U.S. Treasury debt—for six months. Such conditions occur at extremes in short-term lending for investment purposes. This condition in turn implies a peak in financial markets, which today more than ever rely upon speculative borrowing to keep them rising. Many observers have discounted the implication of the current “inverted yield curve,” because it has been in effect for a number of months with no reversal in stocks. History shows, however, that the indicator’s timing is almost always within a matter of months. Every passing month gives a reason to be more concerned about this condition, not less.

This chart of Yield Ratio vs. Stocks demonstrates the utility of this indicator. When the yield curve was negative in 1978-1980, the stock market underwent three “massacres” and persistently lost value in real terms. The stock market peak of April 1981 occurred after six months of a negative yield curve. The peak of 1989 in the Value Line Composite and Dow Jones Transports occurred four months after this condition began, and the high in the New York Composite index of September 2000 occurred two months afterward. After each of these latter two junctures, at least one market index fell at least 47 percent. The yield curve has now been inverted for six months. Essentially, it is right in the normal area when a reversal in the stock market usually occurs. [The subscriber] who brought this relationship to our attention, points out, “It fits perfectly with the expectation of the top occurring within the 1st quarter of 2007.

Has anyone found a chart for bond differentials, the only one I have found is for Bloomberg but we all know how much that is going to cost



Alternatively, Investing.con allows you to download historical data

Hi PipRippy and forexin101,

I think this is something that you are looking for...

http://www.worldgovernmentbonds.com/...storical-data/

There you will see your differentials

Let me know how you get on