"By now, everyone knows Tuesday was a big day for the EM bond market. But has the market really taken stock of how ‘bad’ things are?
Bloomberg reports on Thursday that this is probably the biggest drop in creditworthiness for emerging-market borrowers since the credit crisis started. Worse still, it is deepening. This they say is because speculation is intensifying (no-doubt among the buy-side) that central banks will scale back record stimulus**.
(*It’s a view that possibly represents the largest buy-side irrationality since fund managers decided going against the long-term yen trade was a good idea. Or that Abenomics represented something more permanent than a major mean reverting arbitrage opportunity.)"
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