The video this transcript is based on appeared on December 19.

NEW YORK (TheStreet) -- Ross Greenspan explains how the interest rate market correctly predicted the Fed's token taper in December and what clues it may be providing for 2014.

VIDEO TRANSCRIPT:

Jill Malandrino:
Many traders were looking for a late February/early March taper but the Fed came along yesterday and surprised us with a token taper. Ross Greenspan, a trader in interest rate pit from the floor at the CME Group, you actually called that correctly in mid-November, expecting a token taper before December. What were the clues from the interest rate market and what are we looking for for 2014?

Ross Greenspan:
So some of the clues I suppose were that in the options markets and India futures we started to see some steep interplays at work, sort of bigger than expected and just caught our attention. We saw D five, six. Somebody put on a lot a steep winners. We heard a rumor it was PIMCO. We thought 'PIMCO?' T hey know something so we started to pick our head up about that.

Jill Malandrino:
Right and that's why I feel like it's very important for equity-only investors to look at multiple markets and options and futures particularly with interest rates because that gives you a clue as to what's going to happen S&P overall. So now let's shift focus, what are we looking at for 2014? Where are the trades right now?

Ross Greenspan:
So we gotta keep looking at the interest rate complex. I think the equity market participants were somewhat caught off guard by how the market responded to taper and that's just, I mean I think maybe people were posted position short, expecting the market to sell off. As far as the interest rate complex goes we really gotta wonder how steep are we gonna get and how fast is the Fed gonna keep tapering in January, are they gonna announce another taper? How about March and April? And then one thing I've noticed today is we're really not seeing the thirty-year sell off with the rest of the Treasury complex and so we gotta keep an eye on that. How is the thirty-year gonna stay big going forward and is that eventually going to put a cap on yields on the 10-year?

Jill Malandrino:
Alright excellent Ross, thank you so much. For TheStreet I'm Jill Malandrino.

Written by Jill Malandrino in New York.

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