Why The Rich Get Richer
Erika Taught Me
Understanding Sturt Desks and Short-term Interest Rate Trading
Sturt desks focus on short-term interest rate trading, which involves borrowing money at a low interest rate and lending it back at a higher rate, typically for loans of up to one to two years. These desks often deal with one day loans as well as longer-term loans such as 10-year bonds. Short-term interest rate trading is a high-volume business that involves borrowing money daily instead of taking out a longer-term loan. This type of trading is affected by factors like government policies and future interest rate predictions. In 2008, the market for loans dried up, but Sturt desks utilized foreign exchange swaps, a collateralized loan system, to manage risks effectively.
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