Bank of America CorpBAC
Mentioned
Impact on stocks 2
Financials
Bank of America CorpDigital Finance & Tokenization
Citigroup Inc.C
Mentioned
Bank of America CorpCitigroup Inc.The cost of hedging against swings in the dollar has fallen to its lowest level this year, signaling that traders see little chance of a major catalyst disrupting the world's reserve currency. A measure of one-month implied volatility on the Bloomberg Dollar Spot Index this week sank to its lowest since December, a sharp retreat from the March spike that followed the onset of the Iran war. The calm is reinforcing one of this year's defining market themes: the durability of the US stock market and subdued currency volatility are encouraging investors to pile into carry trades, which profit from interest-rate differentials and tend to perform best when exchange rates and risk appetite remain stable. According to a recent Bank of America survey, global portfolio managers are the most bearish on the yen, a common funder of currency carry trades, in about four years, while leveraged funds, asset managers and other speculators hold more than $40 billion of net long positions in the greenback, based on Commodity Futures Trading Commission data through July 7. Analysts at Citigroup noted that July tends to be historically favorable for carry trades from a risk-return perspective, but cautioned that August often marks a turning point as macro volatility picks up, leaving increasingly crowded carry positions vulnerable to unexpected headlines.
Bank of America CorpCitigroup Inc.