From global markets to questions of development, money and economic activity.
617 results
Expectations of Federal Reserve rate cuts did not weaken the dollar against other major currencies in July 2019. Gregory Basile, Jonathan Fortun and Robin Brooks identify simultaneous easing signals from other central banks and a reduced exchange rate response to interest differentials. Both mechanisms limited the currency impact of a more accommodative Fed outlook.
Read the workA recovery in Chinese equities helped emerging market portfolio inflows reach $40.8 billion in June 2019, their strongest reading in five months. Gregory Basile and Jonathan Fortun distinguish $12.6 billion of equity investment from $28.2 billion in debt. The broader net capital flow measure recorded outflows in May, highlighting the difference between periods and coverage.
Read the workSmaller current account deficits did not eliminate emerging markets’ external financing risks in June 2019. Large debt repayments still warranted caution, particularly in Turkey and South Africa. The assessment also identified resident capital outflows as a vulnerability in Turkey and Argentina, where import compression had improved the current account without removing financing pressures.
Read the workLow underlying inflation challenges estimates that treat much of the euro area periphery’s unemployment as structural. Gregory Basile, Jonathan Fortun and Robin Brooks use the Phillips curve to compare unemployment gaps with inflation outcomes. Their June 2019 analysis argues that conventional measures understate remaining economic slack and overstate structural unemployment in those economies.
Read the workRecovering equity investment in emerging Asia triggered an IIF portfolio flow surge alert on June 3, 2019. Gregory Basile and Jonathan Fortun identify China as a key driver of the rebound. The recovery followed trade tensions that had produced the largest emerging market capital outflow in six months.
Read the workImproving global growth signals and a more accommodative Federal Reserve did not translate into a uniform emerging market currency or capital flow rebound in early 2019. The report attributes that gap to heavy investor positioning accumulated during a decade of loose monetary policy in the major economies. It therefore raised its 2019 nonresident inflow forecast only modestly, to $1,260 billion from $1,135 billion in 2018.
Read the workWhy did a more accommodative Federal Reserve fail to lift many emerging market currencies in early 2019? Jonathan Fortun, Robin Brooks and Tariq Khan suggest that accumulated investor positions after years of easy monetary policy limited the response to further easing. Excluding China, the recovery in flows appeared weak, with meaningful first quarter inflows concentrated in Indonesia and Mexico.
Read the workImproving financial conditions were not enough to arrest the emerging market growth slowdown in February 2019. Jonathan Fortun and Tariq Khan report a tracker reading of 2.8% on a seasonally adjusted, annualized three month basis, as hard data and business sentiment weakened. They nevertheless anticipated a rebound over the following months.
Read the work