(Harvest) As we recently highlighted, capital has been flowing into the U.S., bringing down yields in correlation with yields elsewhere. Investors in Europe and Japan, for example, are fleeing negative yields in their domestic markets and looking for a “safe” store of value in the U.S. They are buying U.S. dollar denominated fixed-income instruments, and hedging the currency exposure back to euros or yen. This has resulted in large supply-demand imbalances in the market for currency hedging instruments.
Exploiting A Global Shortage of U.S. Dollars
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