An Introduction to Bond Carry Trading Strategies

Bond carry trading is a popular strategy among investors who are looking for higher returns while minimizing risks. The basic premise of this strategy is to buy a high yield bond and sell a low yield bond in the same currency and sector, with the intention of capturing the difference in yield, or carry. In this article, we will describe the mechanics of this trading strategy, discuss the scenarios where it can be profitable or loss-making, and outline capital requirements and risk management considerations, including the possibility of default