Treasury Rout Threatens EM Carry Trade as Citi Pulls Back

US Treasury yields rose to their highest level in decades, prompting Citigroup to reduce its emerging-market carry trade positions. Carry trades involve borrowing in low-yield currencies to invest in higher-yield assets, a strategy that had gained adoption among emerging-market investors in 2026. Rising Treasury yields increase borrowing costs and reduce the profit margins of such trades.

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