Global Macro Service > Research Briefings > Global

EM sell-off: a retreat from risk

​Emerging market (EM) currencies and local debt have sold off since mid-April, although there is a wide spread of performance across EMs. We find that both FX and local bond performance in EMs is well correlated with our in-house country-level economic risk indicators. These indicators correctly flagged up the dangers in markets such as Turkey and Argentina. There is also a (weaker) correlation between recent EM asset performance and the strength of recent capital inflows; markets with heavy inflows have tended to sell off more.

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