Citigroup reports a resurgence of the carry trade, but with a notable shift: hedge funds are now using US dollars instead of yen to fund investments in emerging markets. This change is driven by expectations of Federal Reserve rate cuts and the Bank of Japan’s recent rate hike, which have altered the traditional carry trade model. Hedge funds are increasingly bearish on the dollar and are using it to purchase emerging market currencies like the Brazilian real and Turkish lira. However, Citigroup anticipates this window for carry trades may be short-lived due to potential volatility surrounding the upcoming US presidential election.