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China and the market for US Treasuries

Weekly investor research

17 August 2015

China’s adoption of a more flexible exchange rate poses risks to developed bond markets, because a more flexible RMB means that China will need fewer reserves going forward. Moody’s downgrade of Brazil sparks spread compression. Inflation was lower than expected in India. Turkey’s central bank signals support for those with FX liabilities as the election draws nearer. Indonesia’s President Jokowi promotes technocrats in a cabinet reshuffle. Costa Rica pushes its fiscal reform forward. Russia’s economy shrinks. Ecuador is downgraded. Saudi Arabia prepares to issue debt. The global backdrop remains unsettled, which is not favourable to Emerging Markets assets.

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