Tips for Report

MM REPORT TIPS Financial Markets

There are few things that you have to keep in mind for your report

1. As said in the instructions for you assignment, you have to focus on money market (short term debt market in a specific country within the Asia pacific regions. Since you are a bank the rates of reference here are the interbank offer rates. Keep in mind that an increase, decrease in rate will have an influence on the value of your long and short positions (i.e. the products that you have bought and sold, respectively).

2. In your market view, you will refer to the market marker from the country you have chosen e.g. for SIBOR but also to the overnight repo rate as this is the key indicator in Singapore and any changes in this rate is likely to trigger changes interbank market. In you market view you need to make links between changes in interest rate and the economic data that you have chosen to support your view. In other words, what could be the impact on interest rates of expected inflation, central bank interventions, foreign exchange…

3. You can always comment the yield curve and include it in your market view. Use the theories studied in this subject to explain the curve and explain what the market may be expecting future rates to be.

4. For your trading strategies you will need to consider the impact of the predicted rate change on your bank potential positions. For instance, if interest rates go up or down what will happen to the cost borrowing or return from investing? For instance think of this, if your bank is borrowing using longer term money market product, what will be the impact of a potential increase in interest rate within the coming weeks? What if your bank uses mainly very short term instruments (e.g. 90 days) and the borrowing agreements have to be renegotiated in 90 days?

5. In your report, you should also discuss opportunities for speculation. In your speculation strategy you can be as specific as you like in term of the...