Manulife IM’s $309B Unit Sees Dollar Swap Costs Fall Post-Ceasefire
Demand for dollar funding in $9.5 trillion FX swaps has declined following the US-Iran ceasefire, with cross-currency basis costs falling notably versus the euro and Swiss franc. Manulife Investment Management’s CIO Nathan Thooft, overseeing $309 billion, attributes the reversal to easing risk premium and below-expectations 0.2% core CPI.
1. Declining Dollar Swap Demand
Measures of cross-currency basis in the $9.5 trillion FX swap market have eased, indicating reduced global demand for dollar funding, especially versus the euro and Swiss franc, as the recent US-Iran ceasefire unwound risk premia.
2. Manulife Investment Management Commentary
Manulife Investment Management’s CIO, Nathan Thooft, highlighted the reversal of the dollar trade, noting his teams oversee $309 billion in equities and multi-asset solutions that are repositioning in response to fading geopolitical risk.
3. Impact of US Core CPI Data
March’s US core consumer price index rose 0.2% month-over-month, below market forecasts, softening expectations for further Federal Reserve tightening and contributing to the dollar’s recent 1.5% weekly slide.
4. Outlook for Fed Policy and FX Flows
Analysts warn that FX flows and hedging costs remain sensitive to evolving conflict narratives and central bank signals, with the near-term outlook for the dollar described as binary pending geopolitical developments and Fed policy shifts.