Buck Naked In The Bond Pits—Foreign Investors Buying UST Yield W/O Ultra-Expensive FX Protection

The soaring cost of buying protection against dollar gyrations is spurring more foreign investors to buy US bonds “unhedged”, raising the risk of painful losses and wider market ructions if the US currency weakens…..Hedged European investors now earn a roughly minus-0.5 per cent yield on a 10-year US Treasury on a three-month rolling basis, according to Bloomberg data, compared to an unhedged yield of 2.58 per cent. Hedged Japanese investors earn minus-0.3 per cent.