carry trade

carry trade
A trade where you borrow and pay interest in order to buy something else that has higher interest. For example, with a positively sloped term structure (short rates lower than long rates), one might borrow at low short term rates and finance the purchase of long-term bonds. The carry return is the coupon on the bonds minus the interest costs of the short-term borrowing. Of course, if long-term interest rates unexpectedly rose(and long-term bond prices fell as a result), the carry trade could become unprofitable. Indeed, if this occurred, there could be a number of investors trying to unwind the carry trade, which would involve selling the long-term bonds. It is possible that this could exacerbate the increase in long-term interest rates, i.e. push the rates even higher. Related: currency carry trade. Bloomberg Financial Dictionary

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carry trade UK US noun [C] STOCK MARKET
► a method of investing in which an investor borrows money at a low interest rate to buy an investment that is likely to produce a much higher amount of profit. Carry trades are often used by investors in foreign currencies: »

The carry trade is mostly driven by Japanese individuals trying to improve the return on their savings.


Financial and business terms. 2012.

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Look at other dictionaries:

  • Carry trade — Saltar a navegación, búsqueda El carry es el retorno que produce un activo mientras lo mantenemos en nuestra posesión (si es positivo) o el costo de mantener un activo (si es negativo). El carry trade es una técnica que los grandes inversores… …   Wikipedia Español

  • Carry trade — Carry trade  одна из стратегий действий инвесторов на фондовом и валютном рынке (форекс). Термин не имеет общепринятого перевода на русский язык. В основе стратегии лежит то обстоятельство, что в различных государствах действуют различные… …   Википедия

  • carry trade — noun (finance) A transaction in which funds are borrowed in a country that has low interest rates and invested in a country that has higher interest rates. • • • Main Entry: ↑carry …   Useful english dictionary

  • Carry trade — Le carry trade ou l’opération spéculative sur écart de rendement[1] est une technique financière très employée sur le Forex, et qui consiste à profiter des écarts de rendement entre différents types d actifs. Le carry trade n est pas un arbitrage …   Wikipédia en Français

  • Carry Trade — Als Currency Carry Trade (auch CCT) bezeichnet man eine Anlagestrategie auf dem Devisenmarkt. Dabei nimmt der Investor in einer Währung einen Kredit mit vergleichsweise niedrigen Zinsen auf. Das so aufgenommene Geld investiert er gleichzeitig in… …   Deutsch Wikipedia

  • Currency Carry Trade — (auch CCT) ist eine Spekulationsstrategie, bei der ein Spekulant einen Kredit in einer Währung mit vergleichsweise niedrigem Zinsniveau aufnimmt, um davon Zinspapiere zu kaufen, die in einer anderen Währung mit höherem Zinsniveau notiert sind. Er …   Deutsch Wikipedia

  • gold carry trade — A carry trade where you borrow and pay interest in order to buy something else that has higher interest. The gold carry trade works as follows. A central bank loans a bank (sometimes called a bullion bank) some gold. The gold lease rate is… …   Financial and business terms

  • Currency Carry Trade — A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. A trader using this strategy attempts to capture the difference… …   Investment dictionary

  • currency carry trade — A carry trade where you borrow and pay interest in order to buy something else that has higher interest. For currencies, it might be that you borrow in Yen (where the interest rate might be low) and use the proceeds to purchase U.S. dollar long… …   Financial and business terms

  • Cash-And-Carry Trade — A trading strategy that involves the simultaneous trading of two similar securities in order to recognize an arbitrage profit. Also known as basis trading or buying the basis. In a cash carry trade, the first trade involves the purchase of a… …   Investment dictionary

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