oussama94
05-28-2017, 23:29
A good gauge of fixed income ******* flows are the short- and longterm
yields of international government bonds. It is useful to monitor the
spread differentials between the yield on the 10-year U.S. Treasury note
and the yields on foreign bonds. The reason is that international investors
tend to place their funds in countries with the highest-yielding assets. If
U.S. assets have one of the highest yields, this would encourage more investments
in U.S. financial instruments, hence benefiting the U.S. dollar.
Investors can also use short-term yields such as the spreads on two-year
government notes to gauge short-term flow of international funds. Aside
from government bond yields, federal funds futures can also be used to estimate
movement of U.S. funds, as they price in the expectation of future
Fed interest rate policy. Euribor futures, or futures on the Euro Interbank
Offered Rate, are a barometer for the euro region’s expected future interest
rates and can give an indication of euro region future policy movements.
We cover using fixed income products to trade ** further in Chapter 10.
yields of international government bonds. It is useful to monitor the
spread differentials between the yield on the 10-year U.S. Treasury note
and the yields on foreign bonds. The reason is that international investors
tend to place their funds in countries with the highest-yielding assets. If
U.S. assets have one of the highest yields, this would encourage more investments
in U.S. financial instruments, hence benefiting the U.S. dollar.
Investors can also use short-term yields such as the spreads on two-year
government notes to gauge short-term flow of international funds. Aside
from government bond yields, federal funds futures can also be used to estimate
movement of U.S. funds, as they price in the expectation of future
Fed interest rate policy. Euribor futures, or futures on the Euro Interbank
Offered Rate, are a barometer for the euro region’s expected future interest
rates and can give an indication of euro region future policy movements.
We cover using fixed income products to trade ** further in Chapter 10.