XXV - 2020: The Year The Carry Trade Died?
Source: istockphoto.com
Despite the coronavirus outbreak in China that has partially shut down the second-largest economy and downgraded global growth expectations, investor appetite for U.S. ‘long duration’ assets seems unabated as both the U.S. growth (technology) stocks and long maturity U.S. Treasuries have reached new highs.
With the U.S. Federal Reserve committed to keeping rates low (or perhaps cutting them in the face of the coronavirus growth scare) and supporting the collateralized overnight lending market (repo) through at least April of this year, we’ve seen a compression in risk-based trading strategies, or so-called