Energy Is Repricing Carry
The flavour of the month... or year?
The conflict in the Middle East has generated significant two-way price action, causing headaches for macro desks.
In the FX space, one theme isn’t providing anywhere near as much uncertainty, and is starting to gain more attention. We’re talking about a hybrid of the carry trade, with a bias toward net energy beneficiaries over pure interest-rate differentials.
Even with our view of de-escalation in the coming months, the underlying dynamics behind the theme could continue to offer gains from a total return perspective.