A ‘classic emerging market crisis’ as investors flee US assets
The usual flight to safety toward long-term US government bonds occurred at first but has since very much reversed. The reversal shows no signs of slowing.
This week it’s been a tale of two markets. Global equity markets have been in a state of chaos, swinging from panic to relief and back to panic as US President Donald Trump wavered on tariffs but held the line on China.
Meanwhile, the bond market has been defying Trump, with long-term yields nudging higher to worrying levels, forcing him to call a 90-day truce with trade partners. The usual flight to safety toward long-term US government bonds occurred at first but has since very much reversed.
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Jonathan Shapiro writes about banking and finance, specialising in hedge funds, corporate debt, private equity and investment banking. He is based in Sydney. Connect with Jonathan on Twitter. Email Jonathan at jonathan.shapiro@afr.com
