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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Henry Volquardsen who wrote (287)6/29/1998 2:59:00 PM
From: Michael Friesen  Read Replies (1) of 3536
 
Henry,

>> debt/GDP ratios are not coordinated with yields. If it was US rates would be lower than German rates.

I meant "ceteris paribus". Am I still wrong?

Re "Shorting JGB": If you would correct my understanding I would be grateful. I don't know much about trading the actual bond market; I'm only familiar with simple US T-bond futures. I assume that when you actually short a bond, you are responsible for paying the interest? Therefore, the traders lend in Japan at short-term rates and end up having to pay long-term rates when they are short the bonds, and get squeezed? Just out of curiousity, what is the average amount of leverage employed, and what sort of nominal swings in rates cause these headaches for the hedge funds (but $$$ for you as you mentioned)?

Thanks,
Michael
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