After a selloff slammed Japanese bonds late last year, Brendan Murphy spotted a trade that looked too good to pass up.
The Insight Investment fund manager piled into 30-year Japanese government bonds, where yields were near historic highs after rising inflation hit debt prices. With the addition of foreign-exchange derivatives that exploited the gap between interest-rates in the US and Japan, the trade promised a juicy 7% annual payout. Of course, that largely hinged on the Bank of Japan successfully tamping down consumer prices — a move that Murphy and a slew of other international investors saw as all but inevitable.