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Gary:
The only likely change will be that there are more 32nds
between given yield spreads, so hedgers can more effectively
hedge--that is, if they want to hedge at 6.0235 they can now
get closer to that exact percent yield. It may mean that
trading ranges are slightly wider. But it may not mean more
volatility, just more range. A good example might be the
bunds, which trade in smaller increments per yield.
The ten year notes are not as liquid as the bonds [maybe not
as deep is a better description]. This change will not move
anyone to the notes. The notes have much smaller range and
true range and trade more like eurodollars.
Best,
Tim Morge
Gary Funck wrote:
>
> Is the new composition of the bond future likely increase, or decrease
> volatiiity? Increase or decrease slippage due to bid/ask spread?
> Since the ten year is trading generally as much volume as the 30 year,
> is it now the preferred trading vehicle?
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