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Inside the Currency Market: Mechanics, Valuation, and Strategies
book

Inside the Currency Market: Mechanics, Valuation, and Strategies

by Brian Twomey
November 2011
Beginner
335 pages
9h 33m
English
Bloomberg Press
Content preview from Inside the Currency Market: Mechanics, Valuation, and Strategies

Bonds and Yields

The bond interplay has two sides, the bond price and the bond yield. Both have an inverse relationship. As bond prices rise, yields decrease and vice versa. This scenario factors for all government bonds. The choice of which side is the best investment angle depends not only on the day's LIBOR but the trend in LIBOR in terms of the three-month target.

A yield investment is a risk trade while the bond purchase is the safe trade due to backing by government revenues. What drives either side of the bond/yield interplay is interest rates, and what drives interest rates is economic conditions short and long term. In market terms, it is bond cash flows that determine a currency-pair price in nations whose bonds are tied to economic ...

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Publisher Resources

ISBN: 9781118149331Purchase book