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Trading Yen reclaiming carry trade as U.S. bond yields rise

Discussion in 'Shares' started by Tropo, 21st Jan, 2010.

  1. Tropo

    Tropo Well-Known Member

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    The recent spike in U.S. bond yields, coinciding with a rally in the dollar against the yen, is flagging a return to the yen to fund carry trades -- the risky strategy of using a low-yielding currency to purchase assets in higher-yielding currencies in the search for better returns.

    The rise in U.S. bond yields is making the cost of carry in the dollar more expensive, which should prompt investors to use the yen -- offering lower rates and less volatility -- to wade back into speculative assets.
    more ... Yen reclaiming carry trade as U.S. bond yields rise | Reuters