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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.