Tuesday, May 24, 2005

The tide is coming

Housing, hedge funds spur bubble worries / Some experts fear low interest rates may have pumped too much cash into global markets
One of the most common hedge fund strategies, fueled by ultra-low short- term interest rates, has been what's known as the carry trade.

In carry trades, investors borrow money at low short-term interest rates to purchase longer-term financial instruments that offer higher yields. Some investors cross national borders, borrowing in a country with low rates to invest wherever yields are richer.