Reported 4 months ago
Morgan Stanley warns that the increasing uncertainty surrounding the US election could jeopardize popular macro trades as investors rush to reduce exposures. Strategies such as being long the dollar against lower-yielding peers and holding underweight positions in longer-term Treasuries could face pressure as investors pare back risk before November, impacting macro markets. The strategists also highlight risky macro positions as elections approach, such as duration-neutral Treasury yield curve steepeners, underweight US duration versus Europe and Canada, and being long the US dollar against lower-yielding currencies. Despite the crowdedness of the long dollar trade, they anticipate the currency will see some support in the coming months as global bond yields decline faster than in the US.
Source: YAHOO