Business & Finance
Carry Trades Are Riding High on Wall Street
Key Points
Carry Trades Are Riding High on Wall Street Scott Bessent’s attempts to drive down US bond yields are giving investors another reason to plow more money into carry trades. It’s a popular but often risky strategy in which investors borrow cheaply in currencies like the US dollar, Japanese yen or euro, and put the money to work in higher-yielding currencies like the Turkish lira, where interest payments on bonds or money-market funds can be as much as 40% or higher. The thinking is that the...
Carry Trades Are Riding High on Wall Street
Scott Bessent’s attempts to drive down US bond yields are giving investors another reason to plow more money into carry trades.
It’s a popular but often risky strategy in which investors borrow cheaply in currencies like the US dollar, Japanese yen or euro, and put the money to work in higher-yielding currencies like the Turkish lira, where interest payments on bonds or money-market funds can be as much as 40% or higher.
The thinking is that the more the Treasury tries to lower yields, the more the dollar will weaken. The emerging-market carry trade has returned about 22% since the end of 2024.
“It’s a carry world,” says Cathy Hepworth of PGIM. “There’s a ton of money looking for yield.”
Elsewhere in markets, US government intervention is still the hot topic. Here’s a round-up of the latest: