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Thread: US dollar carry trade ready to bust

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    Join Date
    Aug 2006

    Default US dollar carry trade ready to bust

    Mother of all carry trades faces an inevitable bust
    The Globe and Mail, Nov 2, 2009

    Let us sum up: traders are borrowing at negative 20 per cent rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade. Every investor who plays this risky game looks like a genius – even if they are just riding a huge bubble financed by a large negative cost of borrowing – as the total returns have been in the 50-70 per cent range since March.
    The article predicts a sharp cruel drop in all asset prices, "equities, commodities, emerging market asset classes and credit instruments."

    UPDATE: corrected year date error
    Last edited by North4st; 11-02-09 at 04:40 PM.

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