Morgan Stanley sees the elephants in the room
Fixed income co-head Jakob Horder argues hedge fund crowding means macro markets have fatter tails; eyes more FX hedging to come
As hedge funds have ballooned in recent years, so has their footprint in the few markets large enough to accommodate them. This isn’t a problem when their trades are going well. When those trades backfire, though, it can be a different story – particularly if multiple funds are holding the same position and all try to cut at once.
“That’s why we’re having a one-in-100-year event every five years,” says Jakob Horder, global co-head of fixed income at Morgan Stanley. “There are larger and larger
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