DislikedHey thanks your filling in the wholes of Swiss with Chedder.
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I touched on these in another posting.
USDJPY is a carry trade. Net longs like it as they get the interest rate differential. In times when there is risk aversion in the markets money will be moved out of the carry trades and into safer investments like gold and 10 year T- bonds.
The feds lowering interest rates keeps the yield curve nice and steep as they control the short term rates and the lower end of the Yield curve. The feds lowering rates really has little to do with propping up the markets and more to do with keeping the yield curve steep. If this becomes flatter banks profits will suffer as the differential at which they can borrow money and lend money will be less. The curve has to stay steep for now so that they can make the money back from the write downs they are going suffer. By the way the overall credit write are reported to be 600 billion , so far they have only annouced 160 billion.
http://www.dallasfed.org/research/ec...06/el0609.html
http://www.thecanadianencyclopedia.c...=A1ARTA0005380
http://money.cnn.com/2008/02/29/mark...ion=2008022910
Make for a good read on bonds. The last site is a note of how the treasuries advance as markets drop.
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