'January Effect' To Bring Down Cost Of Dollar HedgesBala Murali Krishna
Just wait for January. That’s the message from Bank of America Merrill Lynch to foreign investors in U.S. credit hit by hefty premiums for dollar hedges. The bank expects hedging costs to decline by 58bps, perhaps a lot more.
“We think this (January) effect is very meaningful and as result expect foreign buying of U.S. corporate bonds to accelerate in January,” the bank said in a research note Dec. 19. One-month hedging costs should decline at least to 3-month costs, which currently implies a . . .
This content is exclusively for paying members. Access all of our content on including years of timeless investment news and in depth analysis for only a few dollars a month by signing up here while also supporting quality content and journalism, or learn more about our premium content here
If you are subscribed and having an account error please clear cache and then cookies if that does not work email firstname.lastname@example.org and we will get back to you as quick as humanly possible