Submerging Markets: EM Debt, FX Dumped After Fed Hike

A dollar spike along with a hawkish statement has sent Emerging Markets into a tailspin...

Or more of a tailspin...

EM FX is tanking...

To almost its lowest since early 2016...

And EM Debt is back at Feb 2016 lows...

Artist's impression of EM right now...

Comments

shortonoil boostedhorse Wed, 06/13/2018 - 15:07 Permalink

The EM is 34% of world GDP and 44% of world trade. Ignorance is bliss until it isn't. This is the continuation of the gutting of the the world's peripheral economies. Capital is now flowing to the DE from the EM. It is the only reason that the developed economies aren't yet eating their cats and dogs like they do in Venezuela. Oil is the main culprit of the transfer, it's artificially manipulated high price is forcing down EM currencies and shoving bond holders out. Investors are bringing their capital back to safer havens at the rate of more than $1 trillion a year. When the EM has been stripped to the bone, the developed economies will start on each other. Welcome to the end of the oil age.

In reply to by boostedhorse

IDESofMARCH Wed, 06/13/2018 - 16:48 Permalink

The baloon has been pricked. The fed, bankers and fund manipulators have been patching up the baloon with ductape, bubble gum and spray and seal. Take cover it's ready to burst. Wrong time to go long or BTFD, it's time to head for the bunkers.

Let it Go Wed, 06/13/2018 - 22:08 Permalink

A stronger dollar acts like a magnet pulling wealth towards America and away from countries already having problems. If this turns into a self-feeding loop the dollar may soon get much stronger.This could be a real problem for countries that are mired in debt if that debt is tied or pegged to the dollar. This will translate into a lot of economic pain if the dollar grows stronger and many will find themselves under a great deal of pressure just to survive. More on this subject in the article below.

 http://Stronger Dollar Is A Problem For Global Growth.html