USD and FX carry gain in bear flattening - BofA Merrill

Looking at the 33 Fed hikes since 1994, BofAML notes that bear flattening moves following Fed hikes saw rallies in USD and risk assets and selloffs in "safe" assets.

It is notable, according to BofAML, that "the USD gains the most under the bear flattening hiking episodes, rising by 0.8% on average vs G10 in two weeks post-hike."

"In addition, higher carry FX like AUD, CAD and NZD also gain value in G10. By contrast, CHF and GBP fell 0.4-0.8%, while EUR and JPY underperformed as well.," BofAML adds.

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