Macro: Rates and FX
I work in fundamental equities. I like what I do but have always had held a strong interest for global macro. I'd love to learn more about Rates and FX side of the macro strategies. Wondering if anyone could answer some of the following questions to get me started
Banks often lump Rates and FX together. Is this because both asset classes are driven by interest rates, therefore you can cover both with the related/if not the same?
Lots of people in this field seem to have a really quantitative background. Why is this? Are you trying to get edge from your competition by performing complex stochastic/statistical/correlational analysis? Or do you need the quant skills to sift through extensive amount of economic/fundamental data (ie, implied pricing assumptions from swaps/derivs, yield expectations from market etc.)
Does it make sense that if you are good, let's say the top 10% to 20% over a period of 5 to 10 years+, FX and Rates funds are more scalable and the return generated are higher than that of fundamental equities, because even though equities have a higher inherent yield, FX and Rates are deeper markets (tolerant of scaling) and - net of leverage - volatilities (opportunity of profit) are actually higher in FX and Rates than in equities with 3-5x leverage.
I've heard of stories of star trader bringing home 7 to 9 digits, almost always they are rates traders (or sometimes commods guys). What is it about the structure of their trading/payout that allow them, while those in other assets classes can't get even close?
Just for shits and giggles, how would one transition to FX/Rates from 8 years in fundamental equities?