Retarded Question RE: Bond Trading
Hi all,
This will come across as slighly special, and maybe I am overthinking it but was just wondering if someone could help.
If you are a Sov bond trader on the buy side, I.e working at a macro fund. Is your reasoning for buying the govvies for capital appreciation or yield? or both?
Like I remember reading that guys made a killing buying up greek debt and with the decreased risks making money through cap appreciation as yields declined. Is this the main reason? To capitlise on rising and falling yields and thus making money on the change in the par value?
I understand that this is more of a 'fast money' type of strategy Vs. a mutual fund who would most likely be buying for yield.
Cheers - I hope someone can help validate.
They were mainly distressed guys who are now moving into Cypriot international law debt. And potentially the trading of deposits in the banks.
the carry on a trade (income vs financing cost) is certainly a part of the decision to buy or sell a bond.
The only thing "retarded" about your question was using the word "retarded" don't make yourself look ignorant with your word selection.
It's a combination of both, as mentioned previously. A leveraged guy has to weigh the attraction of the carry against the risk of not being able to fund the position.
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