The 2013 taper tantrum came in two waves, and EM FX was under pressure in both waves of rising US yields.

The 2021 spike in US yields was initially ignored by EMFX, but it had an impact, when the US short-end participated too towards end-Feb...
BUT...EMFX is trading better again over the past month, despite some upward pressure on all US yields (although moderate in the short end).

It matters whether you look at TRY or ZAR, not all EMs are the same.
As I commented yesterday, in a reply to @RobinBrooksIIF the EM resilience is especially pronounced in the context of notable USD gains vs major currencies (EUR & JPY YTD) => the divergence vs 2013 is even more pronounced if you look at EM/EUR or EUR/JPY.

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More from @jnordvig

13 Mar
Should the Fed lie?

Some argue that showing 2023 rate liftoff at the March 17 FOMC would be counter-productive, and that it would be better to manipulate the dots lower to strengthen the forward guidance.

Is lying sound central bank communication?
On the one hand, the Fed is trying hard to be accommodative, and the new core element in the Fed's framework is not to be preemptive, and instead wait for realized (inflation) outcomes, before embarking on tightening. Hence, you want low dots.
On the other hand, some FOMC participants may indeed think that inflation will hit their objective (2%, and on a path to exceed it) within the forecast horizon. Hence, you can argue, within the framework, that it is logical then to show 2023 lift-off in that scenario.
Read 13 tweets
21 Jan
I will add this (based on the comments):

A) The ownership structure of bitcoin is special. Institutions (hedge funds etc) have only gotten involved recently, and not in size yet. This is the reason there is no portfolio contagion, bitcoin selloffs do not create 'enough damage'.
B) as more institutions get involved (as all indicators are that they will during this year) the position size and relevance to institutional portfolios will grow. And then portfolio contagion is also likely to increase.
B2) It is even possible/likely that increased portfolio contagion will impact correlations, creating a more positive correlation to other risk assets (think SPX), and this could indeed be self-fulfilling, as higher correlation will mean more portfolio contagion.
Read 4 tweets
20 Jan
We have a new substack out by @GeneralTheorist which digs into the core concepts of money supply, contrasting money expansion under QE (via the banking system) with digital currency (CBDC) provided directly to the public.…
This may seem like an academic debate, and the presentation here is indeed conceptual. But central bank digital currency is potentially just around the corner in some jurisdictions. Hence, it is important to know how it can fundamentally alter the nature of monetary policy.
Digging into the accounting of digital currency also again highlights why 'asset swap QE' has such limited potency (outside a financial crisis). Digital currency provision blurs the border to fiscal policy, and that raises important legal issues, around central bank independence.
Read 4 tweets
30 Dec 20
When I think about a country with testing issues, I think about Mexico, which has had a very high positivity ratio for its COVID testing through the entire pandemic (around 50%). But many US states are now seeing positivity rates really spike too, not far behind Mexico...
The trend higher in positivity rates / hit ratios (blue lines) are partly a function of less testing over the holidays. But it is still telling:

Arizona: >40% hit rate / positivity
Idaho >50% hit rate / positivity
Read 8 tweets
29 Dec 20
Charts on mobility and transmission in Europe over the last month (= recent outliers in UK and Ireland may be a function of new strain)
Here is a chart that shows transmission rates in EU28 at the end of November versus mobility, measured via google's retail and recreation indices.

Back then, Ireland was in lockdown, and had low transmission...
And here is the same chart showing the picture towards the end of December, transmission rates into H2 Dec vs mobility in H1 Dec

Note how transmission in Ireland and UK is off the chart (or at least off the best fit line).

= indirect evidence that the new strain may be an issue
Read 4 tweets
8 Dec 20
Ok, we are ready to officially launch our blog/substack called Money: Inside and Out. We have tested it and populated with 3 initial posts, and you can subscribe here:
One post, called "The Big Myth about Money and Inflation" touched on the conceptual misunderstandings around the link, and how the future may again shake things up, if monetary and fiscal expansion are (aggressively) combined.…
Another post (from today) touched on the possibility of a liquidity crisis within the Eurosystem (written by our Advisor Chris Marsh aka @GeneralTheorist)…
Read 6 tweets

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