Jump to content
House Price Crash Forum
Sign in to follow this  
VeryMeanReversion

Uk Carry Trade

Recommended Posts

You could broaden out the definition of the carry trade to mean borrowing in low interest rate currencies and investing the proceeds in assets which are expected to generate a higher rate of return.

The JPY carry trade was about Mrs Watatnabe buying foreign assets from her JPY savings. It was also about hedge funds borrowing JPY and buying shares in BRazil and bonds in South Africa.

By my broader definition of the carry trade, the BoE has tried to turn the entire UK economy into one giant carry trade. It seems to be working in the short term at least. Like the JPY carry trade, it will fall apart when the returns on the assets fall short of the costs of the debt. Buying an asset that returns -5% a year cannot be sustained even if it is funded at 0.5% per year.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   285 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.