Interest Rates Primer - Capital Flows
I remember when I first started studying why interest rates were important. It was one of the most eye-opening experiences of my life. I originally thought interest rates were irrelevant yields that the boring parts of portfolios were made of. Stocks were always where the cool kids were making money. After conducting a historical study of interest rates, I realized that nations can (and do!) rise and fall because of interest rates. When I began to understand interest rates in their larger context, I recognized they are the asymmetrical linchpin on which the entire financial system turns. I also began to realize that the traders who understood the most about the economy and financial markets were specialists in rates and FX. Global macro in its purest form is interest rates and FX. After the significance of rates clicked for me, I decided to start the journey of specializing in rates and the FX market. As you will see, the rates and FX market are intricately linked. These markets are in
I remember when I first started studying why interest rates were important. It was one of the most eye-opening experiences of my life. I originally thought interest rates were irrelevant yields that the boring parts of portfolios were made of. Stocks were always where the cool kids were making money. After conducting a historical study of interest rates, I realized that nations can (and do!) rise and fall because of interest rates. When I began to understand interest rates in their larger context, I recognized they are the asymmetrical linchpin on which the entire financial system turns. I…
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