Looking forward

“There is a differential between forward implied rates and actual rates most of the time,” says Gilbert Tse of Société Générale in Hong Kong – and market participants in the Asia-Pacific are increasingly showing interest in structured products designed to systematically take advantage of this forward rate bias. Joseph Radford reports


Recent research has underlined that futures rates can often be inaccurate to a considerable degree and should not be counted on as a basis for future market expectations. The National Bureau of Economic Research, a Cambridge, Massachusetts-based think tank, said in its study1 published last year that US federal futures rates were often inaccurate because futures prices often include a substantial risk premium, which entices investors to buy the contracts even if they don’t have a strong view on

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