Hacker News new | ask | show | jobs
by JumpCrisscross 235 days ago
> If both OpenAI and AMZN expect real rates to keep rising while inflation spirals out of control, this deal makes a lot of sense for both of them. They're just duration hedging

It can’t be the same hedge on both sides of the trade.
1 comments
mise_en_place 234 days ago
Correct, oAI is short rates vol.
link
JumpCrisscross 234 days ago
> Correct, oAI is short rates vol

Why vol? They're just short rates, which is a silly way to say leveraged. If rates become volatile but halve, OpenAI does fine. If rates stabilise at 10%, OpenAI fails. There is no "duration hedging," which for OpenAI would involve buying duration, i.e. bets that profit when rates go up, going on.

link