Odd Lots Lots More with Matt Levine and Mike Mackenzie
Sep 29, 2023
Matt Levine, a sharp Bloomberg Opinion columnist, teams up with Mike Mackenzie, a seasoned journalist focused on the bond market. They dive into the pressing basis trade and its historical significance, touching on the recent bond market selloff. The duo shares nostalgic tales from 1990s Tokyo, sprinkling in whimsical debates about self-driving cars. They also dissect the current treasury market dynamics and the systemic risks posed by hedge funds and high-frequency traders, all while keeping the conversation light-hearted and engaging.
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LTCM Crisis in Tokyo
- Mike Mackenzie recalls working as a swaps broker in Tokyo during the LTCM crisis in 1998.
- Salomon Smith Barney unwound their yen carry trade, flooding other banks with trades and causing a dramatic yen appreciation.
Tokyo Nightlife
- Mike Mackenzie describes working night shifts as a broker in Tokyo during the 1990s.
- He and other expats would socialize at Roppongi afterwards.
Basis Trade Concerns
- The basis trade, while concerning to some, might not be as significant a risk as in 2020.
- The amount of leverage is lower, and institutional investors are hedging for higher rates, contributing to the trade's size.