Local currency investment sees record week with withdrawals climbing to $727m
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by Abi Moses on 23rd October, 2016
While nearly 4 months have passed we are still seeing and feeling the wrath of the Brexit war, with the world of finance taking new hits with each day that passes. However, this week has been a monumental week in the space, with local currency investments withdrawals climbing to a whopping $727m.
This is said to be the largest outflow since the third week of the year when investors were unnerved by growth concerns in China.
Financial Times jourmalist, Eric Platt, reports the severity of this withdrawal from emerging market funds invested in local currency bonds:
'It is the latest sign that conviction is hardening that both rates and the dollar will rise by year-end as the Federal Reserve debates lifting interest rates against easing by the European Central Bank and Bank of Japan.'
These behavioural shifts could also be down to the yields on developed marker sovereign bonds being on the rise, making the higher-yielding market debt seem less attractive from the point of view of the trader/investor. The conventional 10-year Treasury rose from 1.36 per cent in July to 1.75 per cent on Thursday.
“Bond yields globally have been picking up,” said Jorge Mariscal, emerging markets chief investment officer at UBS Wealth Management.
“Central banks are signalling that they have run out of ammunition on the monetary policy front and there is also a growing suspicion that inflation is coming back.”
It is also worth noting that the pending US president vote will have a huge bearing on trader movement and like Brexit, uncertainty will be getting the better of us.
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