Alpha Trader
Alpha Trader
Mar 2, 2021
Talking interest rates and volatility - Steve Sosnick joins Alpha Trader
Play • 46 min

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Steve Sosnick, chief strategist at Interactive Brokers.

The biggest issue on many market-watchers’ attention right now is the rise in long-term interest rates, which last week sped up to a gallop. Keeping it simple, Sosnick says to pay attention to the Fed, which has tied its extraordinary accommodation to the return of a combination of full employment and inflation.

In normal times, the move higher in the 10-year yield - only a large handful of basis points at the moment - might not merit a mention, but the problem now, says Sosnick, is the stretched valuations on everything from stocks to commodities to bitcoin.

As with his previous appearance on Alpha Trader, Sosnick is keeping a close eye on volatility. Headed into last week, he noticed the VIX futures curve as quite steep, wondered what traders were so nervous about, and suggested a sell signal was at hand. While the curve has flattened a bit, it's not to the point where Sosnick believes markets are out of the woods.

One risk not many are focused on: April 15. Sosnick notes there are a lot of new entrants into markets, many of whom made big gains last year, and might find themselves with an unexpectedly large tax bill.

There’s plenty more, including why elevated volatility (and hence higher options prices) isn’t going away, and Sosnick’s view on Bitcoin.

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