December 5, 2005

Economics

It’s The Yield Curve Stupid!

by Edward Hugh

Steve Johnson has been hard at it, writing away in the Financial Times:

The chief problem for the yen is that the flattening of the US yield curve has made it uneconomical for Japanese investors to hedge their ongoing purchases of US Treasuries, but a falling yen encourages overseas investors to hedge their purchases of Japanese equities - negating the value of these latter flows in currency terms.”

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