It would make things very clear if some of your pros in some way could show how a hedge fund manager *exactly* executes a leveraged carry trade if he has USD 5mm.Probably a case study.Agreed, that he shorts the JPY bonds (or futures) and uses the income to buy the USD 10s but which JPY bonds/futures and for how long does he hold this trade? What are the margin requirements and tax implications for foreigners? How does he manage his currency risk? What happens if the US yields fall?Most importantly it would be nice to see the various features of carry trades into the life-time of the trade, especially any rolldown featurefor the US leg as the trades ages into its 1st years, 2nd year, etc.\Thanks

QuoteOriginally posted by: AdvaitaAgreed, that he shorts the JPY bonds (or futures) and uses the income to buy the USD 10s but which JPY bonds/futures and for how long does he hold this trade?You don't want to short the JGB's, but JPY currency futures. It's a synthetic way to borrow yen. The other side of the carry trade can consist of anything with a carry over USD deposit rates.That actually means you don't want to invest in 10yr UST because of the flat yield curve.Popular examples would be either high yielding currencies (for example NZD), bonds with a positive carry (actually JGB's would qualify quite nicely there, and so would EM debt) or if you want to live dangerously equities or even EM equity.