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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Jim Willie CB who wrote (27884)3/5/2005 10:54:09 PM
From: mishedlo  Read Replies (1) of 110194
 
Jim here is a chart of the US$ to Yen
futuresource.com

I do not believe the YEN carry trade is making any money.
For starters you assume (I think) that Japn has been in 10 yr treasuries. I think two year or shorter duration.

There has been a 22% drop in the US$ since the 2002 top.
Even at the 10 yr rate and lets be generous and call it 5% japan was losing 17%. If you say that top call is a poor starting point I would have top agree. Even if one called the average 1.12 the carry trade is losing its ass over that timeframe. I am sure the average is much higher than that.

There are periods where it did well june 03 to sep 03 is one
and then again from March 04 to sep 04 or so but for someone buying and holding US treasuries and selling YEN to do it over the long haul has been damn expensive. Thus I believe I was originally correct and I believe you are wrong. At the time I did not have time to look and just took your word for it. IMO Japan is losing its ass. The YEN carry trade is a complete loser.

If the US$ can rally back to 1.20 Japan has a winner. Otherwise they are sitting on huge losses. I suppose they could always devalue and peg to 1.20 or perhaps the US$ goes in rally mode but there is no YEN USD carry trade that I can see. Perhaps one is coming up but for the last 3 years it has lost money if continually held.

Mish
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