I guess you are talking about NAV volatility of the underlying bonds. That changes with local interest rates and is orthogonal to hedging of the cashflows to USD. Interesting. Is the effect measurable?Hmm. But local interest rates on hedged bonds don’t matter, was what I thought I understood, because hedging brings the effective rates on hedged bonds back to US rates? What am I missing?
Various sovereign bonds have different interest rates across the term range than each other, and there are multiple central banks around the world that can affect changes in their short term rates that have knock-on effects on longer term rates. So even if it's all hedged to USD, you're not just subject to interest rate changes in one country but in many, which can reduce overall volatility.
Statistics: Posted by jjj_22 — Wed Mar 05, 2025 1:26 am — Replies 26 — Views 1966