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Carry Erosion. The MNI........>

GLOBAL MARKET/OPINION
GLOBAL MARKET/OPINION: Carry Erosion. The MNI Market News Dynamic G10 Carry
Indicator continues to point to further USD support and increased vulnerability
of traditional high beta currencies. The Indicator shows further deterioration
in the maximum carry available among the G10 currencies, declining further below
US yields (10-year). This makes G10 carry trades relatively unattractive from a
risk/reward perspective. USD based investors have little incentive to take on
currency risk when international returns are below those at home. The USD could
benefit from both higher US yields and the increased risk associated with
external alternatives, namely increased volatility among high-beta currencies.

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