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short duration covering trades

English translation: trades to cover short duration positions

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GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)
English term or phrase:short duration covering trades
English translation:trades to cover short duration positions
Entered by: Laura Vinti
Options:
- Contribute to this entry
- Include in personal glossary

15:38 Oct 3, 2004
English to English translations [PRO]
Bus/Financial - Finance (general) / Bonds
English term or phrase: short duration covering trades
Global bonds unexpectedly experienced a rally, driven by softer-than-expected economic news in the U.S. as well as endogenous factors such as ***short duration covering trades***, carry trades, and speculative positions.

What is it exactly?
Or should it read "short duration, covering trades" ...?

Thank you!
Laura Vinti
United States
Local time: 12:34
trades to cover short duration positions
Explanation:
A "short duration position" may refer to either an outright short position, or to a position with a shorter duration than the corresponding benchmark. In any case, trades to cover a short duration position involve buying cash bonds and/or bond futures - which explains why these positions would fuel a rally in bonds.

HTH, Ralf

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Note added at 3 hrs 57 mins (2004-10-03 19:36:04 GMT)
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Added comment to \'aubonmots\' response:
What you\'re getting wrong here is the concept of \'short\' (as opposed to \'short-term\').

The concept of duration is explained here:
http://www.investorwords.com/1602/duration.html

Check these references for decriptions of short duration positions:
http://www.mlim.com.au/cms/public/mlim003461.jsp
(search for \'short duration\')

http://www.hsbc.com.sg/sg/personal/online/pdf/hsbc_invtbd.pd...
(see under \'Fund Performance and Strategy\')

I used to trade that stuff for more than a decade...


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Note added at 4 hrs 18 mins (2004-10-03 19:57:19 GMT)
--------------------------------------------------

Laura,
Covering a short duration position means bringing it back to neutral, or reducing the short duration. Buying cash bonds is one way of doing this (alternatives being a long bond futures position, or even taking out a receiver swap); the term \'cash\' refers to the fact that bonds are traded in the cash market (as opposed to the futures or forward market). Even a 30-year US Treasury Bond is a cash bond.
Selected response from:

Ralf Lemster
Germany
Local time: 18:34
Grading comment
Thank you!
Laura
4 KudoZ points were awarded for this answer



Summary of answers provided
5 +2trades to cover short duration positions
Ralf Lemster
4short-term trades to cover...
Marian Greenfield
4 -1trades to cover financial liability in the short-term
Trada inc.


Discussion entries: 11





  

Answers


2 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5
short-term trades to cover...


Explanation:
something, presumably foreign exchange or interest rate exposure

Ciao Laura..... Good to see you here.... Any chance you're coming to Toronto?????

msg

Marian Greenfield
Local time: 12:34
Specializes in field
Native speaker of: Native in EnglishEnglish
PRO pts in category: 42
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24 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): -1
trades to cover financial liability in the short-term


Explanation:
in order to stay flexible because further fluctuations are exected

Trada inc.
Canada
Works in field
Native speaker of: Native in FrenchFrench

Peer comments on this answer (and responses from the answerer)
disagree  Ralf Lemster: "Short duration" expresses a particular interest rate position, but does not refer to financial liabilities (2) "Short" does not mean "short-term" in this context - where do you see liabilities mentioned here?
2 hrs
  -> my interpretation is that the trades are necessary to conver for any kinds of liability and that they are short term because the interest rate or the market trend is expected to change 2) my interpretation of covering
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3 hrs   confidence: Answerer confidence 5/5 peer agreement (net): +2
trades to cover short duration positions


Explanation:
A "short duration position" may refer to either an outright short position, or to a position with a shorter duration than the corresponding benchmark. In any case, trades to cover a short duration position involve buying cash bonds and/or bond futures - which explains why these positions would fuel a rally in bonds.

HTH, Ralf

--------------------------------------------------
Note added at 3 hrs 57 mins (2004-10-03 19:36:04 GMT)
--------------------------------------------------

Added comment to \'aubonmots\' response:
What you\'re getting wrong here is the concept of \'short\' (as opposed to \'short-term\').

The concept of duration is explained here:
http://www.investorwords.com/1602/duration.html

Check these references for decriptions of short duration positions:
http://www.mlim.com.au/cms/public/mlim003461.jsp
(search for \'short duration\')

http://www.hsbc.com.sg/sg/personal/online/pdf/hsbc_invtbd.pd...
(see under \'Fund Performance and Strategy\')

I used to trade that stuff for more than a decade...


--------------------------------------------------
Note added at 4 hrs 18 mins (2004-10-03 19:57:19 GMT)
--------------------------------------------------

Laura,
Covering a short duration position means bringing it back to neutral, or reducing the short duration. Buying cash bonds is one way of doing this (alternatives being a long bond futures position, or even taking out a receiver swap); the term \'cash\' refers to the fact that bonds are traded in the cash market (as opposed to the futures or forward market). Even a 30-year US Treasury Bond is a cash bond.

Ralf Lemster
Germany
Local time: 18:34
Specializes in field
Native speaker of: German
PRO pts in category: 143
Grading comment
Thank you!
Laura

Peer comments on this answer (and responses from the answerer)
agree  Asghar Bhatti
56 mins

agree  chopra_2002
11 hrs
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