Carry Trade Out of Danger Zone But Watch Yuan, Citi Quants Say
- Sees positioning worries for the yuan on the funding side
- Overall carry trade positioning below danger levels: Citi
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China’s yuan is more at risk of being squeezed by the unwind of global carry trades as positioning in the yen is not extreme, according to Citigroup Inc.
So-called funding currencies like the Asian pair, which are borrowed and used to buy higher-yielding assets, are still crowded trades, unlike many of their targets, quantitative strategists including Dirk Willer and Alex Saunders wrote in a note to clients. But the yuan especially stands out, they said.