Markets 101 [BETA]

This course takes you through the financial system from the perspective of a macro trader. Each class will go through a major macro asset, market participant, or aspect of the financial system. While giving a nod to some academic theory, the classes will rely heavily on case studies to illustrate how markets function in practice. The course is based on the foundational training program that is offered to all new traders on the Open Markets Desk. There are ten classes total that will be gradually rolled out over the first half of 2023.

Markets 101: Module I

This module includes the first three courses of Markets 101 – Federal Reserve, Treasury Markets, and Agency MBS Markets. We discuss how to understand and anticipate the actions of the Fed, as well as how the Fed impacts markets. Then we offer an overview of the Treasury and Agency MBS market, from market size and structure to common market participants. The course illustrates the topics through a number of case studies, including the Taper Tantrum, March 2020 Treasury market panic, and MBS convexity hedging.

160 minutes.

Markets Participants (Free)

Each market participant operates under different motivations and constraints. Some of them invest to meet regulatory requirements, some to hedge their portfolio, and some are not even trying to make money. This course walks through a few major market participants and offers examples of market participants investing for reasons that have nothing to do with “fundamentals.” Prices don’t always mean what you think they mean.

40 minutes.

Secured Money Markets 201 (Repo/FX Swap)

The repo market and the FX swap market are among the most important markets in the world. They channel trillions of dollars each day and comprise the plumbing that keeps the financial system together. When they break, the markets break. Joseph studied these markets from his seat on the Fed’s trading desk, which has opens lines of communication with all dealer banks and reams of underlying confidential data. This course recreates his understanding using publicly available data and goes through each market and describes the transactional mechanics, market segments, participants and how the Fed is involved.

90 minutes.

Fed Balance Sheet 201

Learn about them mechanics of the Fed’s balance sheet from someone who had full access to it and studied it for years. In the the first half of this course we walk through the asset and liabilities of the Fed and how they behave. In the second half of the course we walk through a few case studies showing how these components interacted during QE, Fed FX Swaps in 2020, RRP/TGA in 2020, and QT.

90 minutes.

Bank Balance Sheet Costs (Free)

If you often hear the term “balance sheet costs” but never understood what they meant, then this course is for you. We walk through a few of the main regulatory constraints limiting bank money creation in the post-Basel III world. Constraints include liquidity regulations (LCR/NSFR), size constraints (SLR) and asset constraints (capital ratios).

25 minutes.

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