The Fate of the Carry Trade

Concerns over its unwinding are overstated, says S&P

It’s a liquid planet, in more ways than one. Low global inflation, China’s $100 billion in foreign exchange reserves, and a growing reservoir of Middle Eastern oil dollars have created an ocean of liquidity. The result, in our view, has been increased risk tolerance, lower equity volatility, and excellent returns in higher-risk asset classes.

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