[Fed rate cut expectations warm up, arbitrage traders increase bets on emerging markets] Jin10 data, August 10 - Spread trading is making a comeback among emerging market investors as the market bets that the Fed will start cutting rates next month, weakening the dollar and boosting market interest in high-yield currencies. From Luminis ( Neuberger Berma ) to Aberdeen Group ( and other asset management institutions, they are ramping up positions in currencies of countries like Brazil, South Africa, and Egypt. They believe that the softening dollar and easing volatility have created a conducive environment for this strategy. In this strategy, traders borrow lower-yielding currencies to buy higher-yielding ones. Earlier this year, such trades recorded double-digit returns, but paused in July due to the dollar's rebound. Recently, poor U.S. employment data has strengthened market expectations that policymakers will have to cut rates next month to avoid an economic recession, driving a resurgence in arbitrage trading. From DoubleLine to UBS, many institutions have recently joined the bearish dollar camp, stating that 'the bearish dollar narrative is playing out again.' Luminis Emerging Market Debt Co-Head Urquhart stated, 'The likelihood of a significant rebound in the dollar is very limited, while the overall performance of global economic growth remains robust.' He prefers to engage in carry trades in South Africa, Turkey, Brazil, Colombia, Indonesia, and South Korea.