Carry trades are in the spotlight again: An index of carry trade returns for 8 Emerging Market currencies jumped to its highest in 7 years. A carry trade is a strategy where traders borrow in a low-yielding currency and invest in a currency that offers higher returns. Investors have benefited from the strategy as global trade tensions have eased over the last few weeks, which has decreased currency volatility. As a result, asset managers have increased their long positions in emerging market currencies. According to CME Group, fund managers' bullish positioning on Mexico’s peso hit a 9-month high. Risk appetite is rising.