|First trade data released for September are not promising, with most countries reporting lower import volumes, suggesting that the risk of a worldwide deceleration in demand is real. Meanwhile with all three major rating agencies downgrading Spain’s long-term sovereign debt rating in the past few days, the sovereign credit quality-gap between developing and developed countries continued to narrow.|
Important developments today:
1. Treasuries continue to tumble following last week’s sell-off
2. U.S. inventories rise by the highest in two years
Two distinct phases have characterized the recent movement of emerging market currencies. The first phase was a sharp decline when the crisis first occurred, as capital flight into the safety of the dollar led to a significant depreciation of emerging market currencies vis-à-vis the dollar.