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Strategies & Market Trends : Trading the SPOOs with Patrick Slevin!
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To: Patrick Slevin who wrote (6002)7/18/2000 2:01:50 PM
From: Gersh Avery  Read Replies (1) of 7434
 
2.5% .. no problem ..

There are many large institutions over there that take that and then use the proceeds to buy US bonds .. it's a no brainer. And works out just fine as long as the yen doesn't start going up in contrast to the dollar.

A higher interest rate would pose a double whammy for these folks. First the exchange rate would move against the trade. Second the raise in interest rates would alter the risk/reward ratio on the trade. Some would opt out of the trade just because of the change in risk level.

I believe that this represents a feedback situation that could move things much further than expected ..
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