“Dawson & Fielding Inc.†believes that the US dollar carry trade is slowly but surely unwinding with implications for equity values.
Dawson & Fielding Inc., the Asia-based asset management firm, reportedly believes that the so-called US dollar carry trade is beginning to unwind as investors become jittery over the strength of the global recovery and the potential for sovereign debt defaults in the wake of the credit rating downgrade of Greece by both Moody‘s and Standard & Poor‘s.
Greece recently had its sovereign credit rating slashed by the three main credit ratings agencies because of fears over its government‘s plans to reduce public borrowing and buy back its ballooning debt will fail.
“Dawson & Fielding‘s†analysts are thought to believe that the specter of downgrade for several other nations including the UK is serving as a timely reminder for investors that the effects of the credit crisis and the ensuing recession are likely to be felt for years to come and this has prompted some to sell assets bought with borrowed dollars in a bid to hold cash.
Sources close to “Dawson & Fielding Inc.†said that the firm questions the wisdom of seeking safe-haven in a currency that is groaning under the weight of record deficits and unprecedented governmental bond issuance.
Nevertheless, many investors have begun to sell off stocks and commodities in the run-up to the Christmas holiday period in an effort to lock in profits.
Dawson & Fielding‘s analysts suggested that the unwinding may not reach full tilt in the absence of a major incident like a large bank collapse but admitted to watching market movements more closely than would normally be the case at this time of the year.