19 Jun 2014
Carry trade strategy re-think on FOMC - BAML
FXStreet (Guatemala) - David Hauner, CFA EEMEA Strategist & Economist at Bank of America Merrill Lynch are regrouping their targets based upon the FOMC.
Key Quotes:
"Our secular rates view remains "dovish" as we spelt out recently, but short term we are concerned about carry trade complacency after the FOMC”.
“Our indicators suggest positioning in EM debt and FX is the heaviest in a year, after perfect tailwinds: short positioning at the start of the year; the US treasury rally thanks to the winter data/buying by EM central banks (China); and the ECB excitement. It is possible that global rates can remain stable for some time, but risk/reward argues to cautiously move positioning against it: our US economists forecast 2Q GDP at 4% and 2H at 3%, and our US rates strategists are short USTs."
Key Quotes:
"Our secular rates view remains "dovish" as we spelt out recently, but short term we are concerned about carry trade complacency after the FOMC”.
“Our indicators suggest positioning in EM debt and FX is the heaviest in a year, after perfect tailwinds: short positioning at the start of the year; the US treasury rally thanks to the winter data/buying by EM central banks (China); and the ECB excitement. It is possible that global rates can remain stable for some time, but risk/reward argues to cautiously move positioning against it: our US economists forecast 2Q GDP at 4% and 2H at 3%, and our US rates strategists are short USTs."