Flat yield curve Pain deferred

Whatever happened to the carry trade disaster? That was the sharp drop in financing profits that doom-mongers predicted would follow the narrowing of the gap between short-term and long-term US interest rates. It hasn’t arrived, at least not yet. Financial institutions seem hardly to have noticed the shrinkage in the difference in yields, from three percentage points to one since June 2004. Hedge funds, which were supposed to be the most vulnerable, have even managed to outperform the US equity...