The Son of Finance of the Great Age

  Chapter 96 The British pound has collapsed (2)

   "What happened?" The noise in the trading room finally woke Andrew up. He wiped the saliva from his mouth in an imageless manner, and couldn't figure out what was going on for a while.

   "Starting to make money!" Zhong Shi smiled slightly, looked at the exchange rate of British pound to Mark on the screen, and said inscrutablely.

   "Make money?" Andrew's eyes lit up, and he followed Zhong Shi's gaze to the electronic display screen, only seeing a straight line segment. "Buying and selling foreign exchange? Why is the pound not moving?" He was still a little sober, knowing that Zhong Shi had been paying attention to the exchange rate of the pound to the mark recently.

   "No, our battlefield is not here, but somewhere else!" Zhong Shi raised his foot and walked outside, leaving little time for Andrew to react.

   "What, isn't it here? Where else can it be?" Andrew quickly got up and chased after him, asking as he walked. He really doesn't understand how there are other places that are more profitable than here when the foreign exchange market fluctuates so violently.

After walking for about ten minutes, they came to a hall that can accommodate dozens of people. This place is slightly smaller than the foreign exchange trading hall just now, but the configuration in front of the traders is roughly the same. In front of him is a TV-like electronic display that is constantly flashing numbers. It is a computer monitor, and there are several buzzing phones. In addition to these, there are quotations scattered all over the place.

  Here is HSBC's bond trading department in London, where traders buy and sell government bonds of various countries every day, earning profits from every tiny price change, and the amount of funds in and out every day is second only to the foreign exchange trading department.

  As soon as Zhong Shi and Andrew appeared in the hall, a man in a suit and leather shoes walked up to them and said respectfully, "Mr. Zhong, you are here!"

  Zhong Shi nodded and followed him into a smaller room without much explanation.

  When Zhongshi’s funds entered HSBC’s brokerage channel, basically all derivatives trading accounts were opened, and the funds will flow to the relevant channels with only one phone call. This time, he basically invested all his funds in foreign exchange trading, and he could only use the funds in the family fund to re-borrow a temporary fund of 50 million pounds from HSBC.

  He will make a big fuss about treasury bond futures this time.

Now there is only one type of British government bond in circulation in the British government bond market, that is, ten-year government bonds with a face value of 100,000 pounds and a coupon rate of 6%. There are sales during the year.

   Bonds, the income is basically linked to the interest rate, and the longer the payment period is, the more intense the price fluctuation will be with the interest rate, and the closer the payment period is, the closer its price is to the face price.

Just because government bonds are guaranteed by government credit, the risk is minimal, so bonds, especially government bonds, are called risk-free investments, and their yields are basically the wind vane of interest rates. Basically the same as the interest rate.

   What Zhong Shi wants to do this time is to issue 10-year treasury bonds this year, and the coupon interest has not yet been paid.

   "Short 10,000 lots, sell immediately!" Zhong Shi, who had just sat down, had no time to take a sip of water, and ordered the broker who was receiving him.

  A contract of 10,000 lots has a face value of one billion pounds. However, the price per lot at this time is about 86,000 pounds, including one-twentieth of the deposit, it is about 4,300 pounds per lot, and 10,000 lots is 43 million pounds. (The real price is 83,000 pounds, but because it is futures, the transaction price is slightly higher)

  In 1992, the average daily trading volume of the British long-term treasury bond futures market was around 50,000 shares. Although Zhong Shi's lot size was considered a big deal, it was nothing and could be fully digested by the market.

  The manager was taken aback for a moment, then closed his mouth wisely, and started typing on the computer screen.

At this time, the infield trading that is basically on-site bidding has begun to wither, and electronic matching has become popular, but for some market maker brokerage companies, the seats in the exchange and the traders wearing vests Still indispensable.

However, within HSBC, these large-scale orders are first matched on the electronic market, and they can also be matched through their own channels. Go to the phone, of course, these also go through the exchange.

   Soon, the sale order was completed, which took about half an hour.

"And then?" When the news of the transaction came, Andrew stared blankly at the numbers on the screen, a little dumbfounded. He never imagined that Zhong Shi would sell another nearly 50 million pounds after pretending for a long time. Treasury bond futures, which puzzled him a lot.

  He is very familiar with futures. No matter what the target is, the basic principle is the same, which is to use leverage to amplify funds, and then earn profits by selling high and buying low or buying low and selling high.

   "Just wait and see!" Zhong Shi didn't explain much, and closed his eyes to rest his mind, as if the person who gave the trading order just now was not him at all.

  UK Treasury.

After Major refused to raise interest rates, Lamont could only allow the Bank of England to buy sterling in the foreign exchange market to maintain the exchange rate of sterling against the mark within the boundaries of the European exchange rate system, but the efforts of the Bank of England could not change the sale of sterling at all. The frenzy, and soon the pound was nailed to the lower limit of 2.7780.

In addition to the exchange rate of Mark, the British pound has also seen a wave of selling against other currencies. The exchange rate of the British pound against the US dollar has fallen from 1.8580 at the opening to 1.8000. the pass.

  In the closed Far East market, the exchange rate of the British pound against the Japanese yen also fell by 2.71 percentage points. Even after the market closed, orders to sell British pounds and buy Japanese yen continued to pour in.

  Basically, the British pound is depreciating against several important currencies in the world. In this case, the Bank of England needs to face not only the pressure from Mark, but also the selling pressure from holders of various other currencies around the world.

  At 10:30, Lamont called the prime minister's office again. On the phone, he urged the prime minister to announce an interest rate increase, and repeatedly explained the urgency of the current situation.

  At this time, the Bank of England has invested more than 10 billion U.S. dollars in foreign exchange reserves in the foreign exchange market, but the pound is still firmly nailed to the edge of the European exchange rate system. What they can do now, apart from continuing to invest in buying pounds in the foreign exchange market, is the only way to raise interest rates.

   Lamont's request was successful, and Prime Minister Major agreed to raise the interest rate by two hundred basis points, from 10% to 12%. The news will be announced at eleven o'clock.

   Lamont was relieved, and he put down the phone without realizing that his back was already dripping with sweat. After waiting anxiously for more than ten minutes, he walked to the window of the finance office and looked at the big screen of Reuters outside, hoping that the news of interest rate hike would give the pound a little vitality and revive it.

The result disappointed him. When the interest rate increase was announced, the pound on the screen did not respond at all, and it was still a straight line. At this moment, the British chancellor felt as if he was looking at a heart monitor. It was a dead patient, the heart would not be beating at all, and the only thing left was to pull out the intubation.

  At this moment, his heart was as cold as water.

   But there are people whose hearts are burning like fire, especially in interest rate related markets, and those who are going in the right direction, like Bell Rock.

When the news of the interest rate hike came, the price of government bonds in the market immediately plummeted, especially the price of government bonds that were ten years away from delivery, and the price immediately fell from 83,000 pounds per share to about 7,400 pounds. In order to meet the long-term interest rate of 12%, it is the real price of the bond.

  In the bond futures market, the price of treasury bond futures, which were ten years away from delivery, also fell rapidly. Each contract fell by more than 1,000 pounds, and then barely stayed at the price of 75 million.

Raising interest rates rashly when market expectations are very low is to attract the return of capital and relieve the pressure of selling sterling in the foreign exchange market, but there are too many things involved in the interest rate, and the government bond market is the first to bear the brunt .

  In addition to the national bond market, the British stock market also moved accordingly. The stocks of those real estate companies plummeted immediately, which in turn affected the performance of the Financial Times Index.

  Since September, London's FTSE 100 index has been rising. This is because the depreciation of the pound will enhance the competitiveness of British goods in the world market, which is a great benefit to British companies. However, after the news of the interest rate hike came, those who bought houses with mortgage loans suddenly added a lot of pressure, or many people would give up continuing to pay for houses because of this. This is bad news for the real estate industry, and the entire market has been affected. The drag on the real estate sector also started to move lower.

  There is a connection between different markets, and this connection is realized through interest rates today.

   "What should I do now?" The broker watched the treasury bond futures price plummet, and in just a few minutes, Zhong Shi's account added a profit of more than 10 million pounds.

   Now the participants in the market have become frightened birds, this kind of sudden interest rate hike without any wind is a nightmare for the long side. At this time, there is only one thought in the minds of the bulls, that is, the ghost knows whether the British government will announce another interest rate hike in a certain period of time in the future to keep the pound in the European exchange rate system, so they can't wait to leave the market , or turn around and start shorting, so this is also the best time for short sellers to leave the market.

   "Close all positions, and move the battlefield!" Zhong Shi said firmly. For less than an hour, he's already made a profit of about 20%, which is more than enough to keep him satisfied.

   "Huh? We still have to move the battlefield? The benefits here..." Before Andrew finished speaking, he saw Zhong Shi standing up and walking outside quickly. He let out a strange cry, and quickly chased him out.

  When the news of the UK’s interest rate hike reached the United States, it was six o’clock in the morning, and the first ray of sunlight was projecting from the sea onto the high-rise buildings in Manhattan. Those hedge fund managers who had been busy all night felt that the dawn of victory had appeared. (Please ask for Sanjiang tickets, I hope everyone will support me at the end of the weekend, the author is very grateful!)

  (end of this chapter)