Insights

The ideas behind the market.

Explainers on the research, in a few minutes each.

Short explainers on the ideas the papers rest on: why the yield exists, why it has been hard to hold, how the structure divides the risk, and what the dollar data say. Each links to the paper it draws on and to the data behind it.

The market
What is the secured Eurodollar?
A dollar claim secured on local sovereign bills, with the currency tail retained by consent: the correction of the first Eurodollar’s two deficiencies.
The trade
Why forward hedging consumes emerging-market carry
Covered interest parity forces the forward curve to price currency risk as a smooth path of decay. Emerging-market currencies do not decay that way.
The trade
The calm regime
Emerging-market currencies hold, drift and then adjust in steps. The long flat periods between steps are what Tranchco monetises.
The structure
What a junior FX layer is, and who holds it
A bounded first-loss position in local currency, held by election by a domestic institution, for a premium, in a loss order agreed before entry.
The architecture
Original sin as an engineering problem
Economists treat the inability of emerging economies to borrow abroad in their own currency as a property of countries. It may be a property of the architecture.
The dollar
The dollar as an asset and the dollar as a unit
Reserve managers are rotating out of the dollar’s asset while keeping its unit. The data say so, and the distinction matters for what comes next.
Data
Ninety-day sovereign rates
The latest verified three-month rates in five markets, beside the US bill. Dated and sourced.
Data
Data and methodology
Every figure on this site with its source, its date, and what is and is not shown.