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

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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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