While equity ‘protection’ costs are rising (VIX over 20 yesterday), and bond risk has risen to 6-week highs, the most prescient ‘hedge’ for a Donald Trump presidency has soared to its highest since the European crisis in 2011.
USDMXN short-dated implied volality has exploded higher in the last few days…
Furthermore, as Bloomberg reports, the largest U.S.-based exchange-traded fund of Mexican equities saw its biggest withdrawals since the 2013 taper tantrum on Tuesday, as renewed FBI attention on Hillary Clinton’s e-mails boosted the odds of a Donald Trump presidency.
The iShares MSCI Mexico Capped ETF has become a popular vehicle for traders looking to bet on the U.S. election, and saw $94 million in outflows.
“This particular ETF seems to be the most connected to the polls,” said Eric Balchunas, who analyzes exchange-traded funds at Bloomberg Intelligence. “This has literally become a proxy for what you think will happen in the election.”
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