Sentence examples for yield differentials from inspiring English sources
Mr Woo argues that the key factor driving currencies is not nominal yield differentials, as it has been in the past, but real yield differentials.This helps explain why QE hasn't always had the anticipated effect on exchange rates.
In fact, S&P investors do rather better than that because of the large number of share buybacks in America.The yield differentials between Japanese and American government bonds are even more striking.
The Reserve Bank of Australia cut rates to 3.25% on October 2nd, in response to weaker growth, and the Aussie dollar's strength is now subsiding.So instead of looking at short-term interest rates that are almost identical, investors are paying more attention to yield differentials in the bond markets.
Second, by raising rates by 25 bps at each scheduled meeting, the Fed has let traders know with near-certainty what their short-term funding costs will be, which has made trading on yield differentials by borrowing short and lending long a low risk endeavor.
The net effect would yield differential migration.
But in recent years, there has been precious little yield differential for traders to exploit.
Their rate hikes this week will help to restore the higher real yields their assets must pay to attract foreign investors.But according to Mr Juckes, this absolute yield differential is not all that matters.
That way an investor collects not only a yield differential but also a profit when an investment is sold for Australian dollars, using the same example, which by then buy more yen than originally borrowed.
The yield differential, or spread, between Spanish and German government bonds climbed back to its highest in a decade on Thursday, a sign of investor nervousness about the implications for Spain of a possible financial and political collapse in Greece.
As shown in the chart, the yield differential between ten-year swap yields and the yield on U.S. government agency bonds has narrowed to zero.
If you act quickly enough, you capture the higher yield plus the free ride on the price increase that happens as investors arbitrage away the yield differential.
