Global Investing

End of carry trade unwind?

Merrill Lynch’s monthly poll of fund managers around the world has a bit of a surprise in the small print. More investors now reckon the Japanese yen is overvalued than see it as undervalued. This is the first time this has been the case since Merrill began asking the question, said by staff to be about eight years ago.

It clearly reflects a 13 percent dive in dollar/yen this year and a 24 percent plunge in euro/yen. But does the new view of value suggest that the unwinding of the carry trade is over? Another question from the Merrill poll shows hedge fund deleveraging levelling off.

McCainonomics

Republican presidential candidate John McCain has admitted in the past that economics is not his strong suit. In an interview with Reuters this week, he expressed a desire for a Treasury secretary who inspires confidence and trust if he should win the White House. rtx92vl.jpgMcCain also aid he could balance the budget by 2013 if the economy gets going and if nothing is done to harm growth.Nothing worrying about any of that.

But the odd eyebrow may have been raised when the Arizona senator got onto the dollar, which he wants to bolster, and China. “The first step that has to be taken is obviously we have to stop mortgaging our economy to China … and asking them to finance our debt,” he said. This sounds like he wants China to stop buying U.S. Treasuries.

“That I think would have the most salutary effect in the short term,” McCain added.