Hedge funds Cash and carry

Hedge funds have started unwinding carry trades, judging by recent moves in the financial markets. Some funds are freeing up cash to meet redemptions triggered by losses they incurred in the credit derivatives market last week. Rather than cutting their distressed positions, they are axing other ones where they still have profits on the table. Other funds have been heading for the exit in anticipation of this forced selling. Carry trades involve borrowing at relatively low US dollar interest rat...