Treasury Rout Threatens Popular EM Carry Trade as Citi Pulls Back
AI Summary
The recent volatility in US Treasury yields poses significant risks for carry trades, a popular strategy among emerging-market investors. As geopolitical tensions and inflation concerns rise, retail investors should be cautious, particularly with currencies like the Colombian and Mexican pesos, which have already shown signs of weakness. This environment may lead to increased scrutiny of emerging-market investments, suggesting a potential shift towards safer assets until market conditions stabilize.
(Bloomberg) -- The surge that sent US Treasury yields to the highest in decades is threatening carry trades that had become the go-to strategy for emerging-market investors this year.
Citigroup Inc. closed its carry basket that included long positions in the South African rand, Mexican and Colombian pesos and Turkish lira against the Canadian dollar and Swiss franc. The move came after a strong US PMI report, a weak 5-year Treasury auction and geopolitical headlines stoked volatility in markets, according to a Thursday note.
Original Article
Published on Livemint
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This is a market news update from Livemint, published on 25 September 2026.
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