With the US Federal Reserve (Fed) starting on a series of fed fund rate hikes from Dec. 16, 2015, US money and credit markets will be on the path toward normalization after seven years of abnormally low rates.
This paper examines the interrelationship between rising emerging market domestic leverage and the emerging markets credit cycle. We see most EM countries at advanced stages of their long-term credit expansions or into a downturn. For most emerging markets countries, the rapid build-up in domestic leverage with no concomitant rise in underlying productivity has left them with the need to restore macro balance.
Nov. 12, 2015
| Tony Wong, Mark Gilley & Justo Gonzalez
Liquidity in fixed income markets has become a major focus of concern inside and outside of the investing community. Investors, asset managers, bank regulators and policymakers are worried that changes in the bond markets, post-financial crisis, have led to greatly reduced levels of bond market liquidity — meaning it may now be more difficult to transact smoothly in bond markets without price disruptions.