Waning U.S. equity risk appetite is being confirmed by developing-nation currencies.
The MSCI Emergency Markets Currency Index was a leadingindicator of distress during the first quarter, but lagged during the little correction in June.
This time around the lag is noticeably larger, and to some extent the magnitude of moves probably represent a ‘catch-up’ as positions are liquidated virtually en masse in less-than-ideal liquidity conditions.
Source: Bloomberg Pro Terminal
Chart: Used with permission from Bloomberg Finance L.P.