Emerging Markets

Bank Indonesia has fallen far behind the curve in its currency management tactics. After fairly steady intervention kept USD/IDR trading near the 10,000 area from May through early August, the authorities have been allowing the pair to move…

The X-axis is the change in the spot currencies against the dollar since late May. The Y-axis is the change in the local 5-year debt. It is a useful way to conceptualize what has happened from a total return perspective. Korea, Czech,…

The dollar is broadly higher against the major currencies, with the Swedish krona and euro suffering the most. Poor retail sales in Sweden and unexpected weakness in the German labor market report (unemployment rose 7k vs the consensus…

The capital outflow from the emerging markets is proving as destabilizing as the previous inflows. Pundits can talk about currency wars all they want, but the real issue is the ability to cope with volatile capital flows, which is the…

The problem in a nutshell is that the U.S. is the world's reserve currency. And so, other countries are forced to adhere to Fed dictates in a liquidity crisis because everyone is hoarding dollars, trying to maintain their supply of…

The latest Fed confab at Jackson Hole is demonstrating that central bankers were so keen to avoid taking much blame for the global financial crisis that they also failed to learn critical lessons from it. That lapse in turn is directly…

In a fashion similar to what became known as the "Asian Contagion" in the late 90s, the current stress in emerging economies has been spreading. One of the nations to experience financial stress recently has been Indonesia, Southeast Asia’s…

One often hears the refrain "the market is not the economy", but what does that really mean? I am going to explain it in my terms here in the context of the global reflation trade - EM meltdown paradox.

I am alarmed at how quickly economic and market volatility has spread throughout the emerging markets. However, I remain positive about the big picture global macro outlook because recent data show that Europe, the US and now China are…

Emerging markets currencies are getting hammered across the board today on the back of the FOMC minutes. Many are touching multi-year or even all-time lows. This provides further confirmation that the Fed's recent monetary stimulus effort…