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I am also curious... If inflation is indeed just "creation of money out of thin air", what are we going to do about Japan? Does this mean that all this time we've been misled and Japan is actually undergoing incredible sneaky inflation that we're somehow not seeing?

Indeed... Most strategies would define a "hurdle rate" (most of the time it's USD LIBOR), but in reality even that's a totally arbitrary choice. Even in theory there's no such thing as a risk-free rate, really. There's a funding rate, which might be different for each individual investor, but...

So how would you explain 30y JGB at <2% yield then? And yield on the current 30y is well below 4% (arnd 2.92%, to be exact). Or do you mean mtges?

+1

Erm, this is incorrect on a whole variety of levels...

I don't have any pointers, but you'll find people that do in a chatroom that arab started. Go to propboards.com and you'll find people who do this.

And what happens if, god forbid, people find out?

RIP

Hmmmm, I always thought the vol IS the breakeven...

Yes, lots of peeps doing it, so it can be done, if you don't get greedy and stoopid.

Ah, then I can't really help, sorry...

It's the European way...

What do you want to know? I neither in risk nor in the insurance industry, but I do fixed income.

Cavalry (IMF) to the rescue now, so buy, Mortimer, buy.

Everything really, apart from when you croak/kick the bucket/shuffle off this mortal coil/give up the ghost/etc, is a non-event in hindsight.

Those or you can probably do FX options w/Oanda or smth... You can also do puts on JGB futures. I imagine that, either way, you'll need to roll every 3 months or smth. And Dexia guarantees announced now, which is good news for Dexia, but not so good news for Belgium/France sovereigns.

I don't know of a good way that doesn't involve having to roll the position constantly.

EO11110 is a bunch of pure unadulterated bullsh1t... I think there's an older thread here about it.

Well, the yield on the current 12m t-bill is smth like 10bps, i.e. 0.1%.

I see... That's fascinating.