US Dollar vs Japanese Yen Morgan Stanley strategist: Favor shortening JPY crosses
- USD should benefit from higher US bond yields
- The evolution of the US bond market will tell us if there is to be a 'summer of carry'. Since most global liabilities are USD-denominated, the cost of USD funds will stay in focus when judging carry prospects
- Should the carry trade resume then it should be felt by liquidity coming out of Europe's economies offering substantial deflationary threats, especially for EMU, Sweden and Switzerland. Should the carry trade collapse, for instance coming on the back of higher US bond yields,