What a 4.5% fixed rate mortgage could mean for currency traders….
Pimco’s Bill Gross explains how the govt may step in to buy treasuries - starts around 5min.
In the video he states that the Fed will want to keep the yield of the 10 yr around 3.5% and it will step in around 3%.
I believe Govt will do this to keep yields down so that banks can charge 4.5% and make a profit off the difference.
If the fed does this how can currency traders position themselves for the potential move?
I have found that recently the EurUsd has been tracking the 10 yr fed notes the best. So the trade is when the yield on the 10 yr hits 3-3.5% start buying the EurUsd.
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