So the hedge funds are borrowing at the short-term repo rate by using treasuries as collateral but it sounds like they still get the interest from the treasuries even though they are sold overnight. So they are borrowing short and investing long to get the spread? Then, they are able to keep leveraging this trade to amplify returns. It seems like this trade makes sense in a rate decreasing environment when longer-term treasuries would increase in value?
fantastic stuff. thanks
So the hedge funds are borrowing at the short-term repo rate by using treasuries as collateral but it sounds like they still get the interest from the treasuries even though they are sold overnight. So they are borrowing short and investing long to get the spread? Then, they are able to keep leveraging this trade to amplify returns. It seems like this trade makes sense in a rate decreasing environment when longer-term treasuries would increase in value?
Ken "Mayo Man" Griffin :
The SEC had a hearing about this, and Griffin told Gensler to basically "screw off." He was the man caught on the basis trade
very appropriate explanation thanks
Thanks Trader count could you explain the relationship between repo haircut and maximum theoretical leverage in a future video?
Many thanks,
Arthur
What is that trading strategy referred to? There's a term for it but I can't remember it
By the way, are you now working in the financial industry as a bid data or python programmer?!?
Thanks. Pls give more explanation on how hedge funds work..
Great explanation, you should return to making videos
Excellent. Thanks.