Is it the end of the world as we know it? The dollar up more than 1 per cent against the yen, 10-year Treasury yields up 12 bp in two days to their highest in eight months… aren’t these the early warnings of the potential for a general dumping of EM assets as the QE liquidity that has sloshed around the world in search of yield starts flowing back home?
As beyondbrics touched on several times in 2012, EM sovereign debt enjoyed an unprecedentedly successful year, with record inflows into EM debt funds, major EM government bonds hitting new lows, and frontier market issues massively oversubscribed.
But the minutes of the Federal Reserve meeting released on Friday, suggesting that QE could come to an end earlier than expected in 2013, should give pause for thought.
The end of QE: what would it mean for emerging markets? | beyondbrics
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