Global Research Unlocked The Traders’ perspective
Mar 27, 2026
Morai Vasudevan, expert in rates volatility and structured products. James Russell, specialist in European government bonds and carry trades. Conor Brides, G10 FX spot trader focused on carry and flow dynamics. They discuss crowded FX and rates positioning, liquidity-driven market gyrations, front-end vol moves and steepener unwinds, and how client flows and structured product behavior shape recent market stress.
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Carry Trades Drove Early Dollar Demand
- FX carry positions (Aussie and SEK longs) were notable crowded trades going into late February and were held longer than other carry exposures.
- Conor Brides says these carry trades and widespread short-vol positioning drove much of the dollar demand via degrossing when the conflict made medium-term views impossible.
Steepeners And Short Payer Risk Amplified Vol Moves
- Rates positioning was concentrated in back-end curve steepeners and long front-end exposures, with Europe showing particularly large positions and many short-vol expressions.
- Morai Vasudevan notes payer skew and sold-payer carry (payer ladders) were common and amplified risk when volatility spiked.
Position Cleanup, Not Just ECB Hike Bets, Pushed Vol
- The sharp inversion and vol spikes in European rates were largely position-cleanup and stopout driven rather than pure repricing for ECB hikes.
- Morai points to disorderly front-end moves, evaporation of liquidity, and crossing bid-offer to cover shorts as evidence.