Free Trial

BofA Says Don't Fall Into The Carry-To-Vol Trap

LATAM FX
  • Bank of America believe US recession risks, uncertainty about Fed monetary policy, and the X-date approaching for the US debt ceiling are likely to keep LatAm FX volatile in the near future.
  • This domestic layer of uncertainty compounds with local question marks, including the timing and magnitude of easing cycles. In this context, LatAm FX, has been generally trading as in normal times, exhibiting a low volatility.
  • However, a risk-off shock could sharply deteriorate carry-to-risk, in their view. This is particularly stark for MXN, whose vol is the most subdued despite its arguably greater sensitivity to US-driven risk-off shocks.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.