Currency-bond equivalence principle: bonds are just claims on future currency. If currency devaluation risk is high, bond risk is equally high. A quant cannot be long bonds while bearish on currency — or must price that contradiction explicitly.
Currency-bond equivalence principle: bonds are just claims on future currency. If currency devaluation risk is high, bond risk is equally high. A quant cannot be long bonds while bearish on currency — or must price that contradiction explicitly.