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Mix-Ansicht- Was ist das Risiko von Hedgefonds: Vermutungen und Fragen... - Heller, 21.05.2004, 21:58
- Interessante Frage! - off-shore-trader, 21.05.2004, 23:12
- aktuelles Problem: Glattstellen der Carry Trades aufgrund steigender Zinsen! - off-shore-trader, 21.05.2004, 23:51
- Re: Was ist das Risiko von Hedgefonds: Vermutungen und Fragen... - MC Muffin, 22.05.2004, 00:12
- Re: Was ist das Risiko von Hedgefonds: Ein paar Fakten - Diogenes, 22.05.2004, 08:49
- Interessante Frage! - off-shore-trader, 21.05.2004, 23:12
aktuelles Problem: Glattstellen der Carry Trades aufgrund steigender Zinsen!
-->11 May 2004, 10:00pm ET
SUSIE GHARIB: One reason Wall Street has been having a rough ride lately is something called"the carry trade." It`s a bet that markets make when interest rates are low. So when interest rates start to go up, those bets start running into problems. Darren Gersh explains.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: About a year ago, boy, did the Federal Reserve have a deal for Wall Street`s big money players. To head off deflation, Alan Greenspan and colleagues drove short-term interest rates down to 1 percent, and then said they would keep them there for"a considerable period of time." Economist Steven East says that was an open door to what Wall Street calls the carry trade.
STEVEN EAST, ECONOMIST, FRIEDMAN, BILLINGS & RAMSEY: If I can borrow at 1 percent and in! vest at 5 percent, I have 4 percent positive carry. So it`s called the carry trade because I can carry my position in long bonds very cheaply. In fact it is so cheap, I make money doing it.
GERSH: And for a considerable period of time, it was great for investors and the Fed. So many people bought bonds, long-term interest rates hit rock bottom. It wasn`t just bonds, investors also bought stocks and commodities like gold. But now that growth and inflation are picking up, East says the Federal Reserve has to worry about all the borrowing it encouraged.
EAST: The risk is that if everybody tries to sell their bond positions all at once, everyone is trying to go through the same door all at one time that things could get pretty messy.
GERSH: A best guess is the carry trade pumped hundreds of billions of dollars into the bond market and other investments, which is why Fed watcher Tom Gallagher says the Federal Reserve now says it will raise rates at a!"measured pace."
TOM GALLAGHER, POLITICAL ECONOMIST, ISI GROUP: What`s happening is that the Fed is saying we`re giving you a month or two to get out of these trades, so investors are doing that by unwinding these trades. The re-flation assets are actually rolling over. Gold is a good example, gold prices have been falling recently. I`m not saying it is the most important factor, but it is one other consideration when you are trying to explain market trends.
GERSH: Gallagher says the Fed has adopted a verbal tightening, sending an unmistakable signal in the code understood by institutional investors that it is time to drop the carry trade. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
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