Thinking in Markets

S1E6 — Yield Cushion Is Not the Whole Cushion


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Episode 02 explained why carry trades can unwind quickly after long calm periods. This episode goes one level deeper and asks what actually protects a carry trade day to day: the yield cushion, the volatility cushion, the liquidity cushion, and the funding cushion. By the end, listeners should understand why a wide yield spread can still be a weak trade if FX volatility or positioning turns against it.

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Thinking in MarketsBy Vox