Emerging Market FX Whipsaw Trap & USD Equity Bust Risk
The risk to EM FX is that the USD pops-up hard into a flight to quality on a stock market drop – which is what happened today. If this continues, everyone funding leveraged carry trades in thin EM FX will bail out hard in one direction, only to have the USD reverse and go DOWN WITH the US equity market once it overshoots - generating wild, whipsaw moves - and potentially devastating losses for investors. A new trade war is reigniting a whole set of old anxieties. www.macroESG.com #macroESG --- Send in a voice message: https://anchor.fm/macro-esg/message