1402 GMT - Worsening sentiment in fixed income leaves the currency market vulnerable to an unwinding of carry trades, MUFG Bank's Derek Halpenny says as yields in Treasurys and German Bunds hit multiyear highs. Carry trades, where investors borrow in low-yielding currencies to buy higher-yielding currencies, have performed well in a low foreign-exchange volatility environment, he says in a note. "Periods of low FX volatility always end with a bang and current market conditions are certainly consistent with an increased risk of that scenario materializing." High-yielding emerging-market currencies would suffer most while the Japanese yen and Swiss franc would outperform, he says.
At the request of the copyright holder, you need to log in to view this content
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Comments