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Will We See Even More Capital Flows to Emerging Markets?

Jamus Lim's picture

One upshot of the recent increase in volatility in financial markets has been a generalized return (again) into the relative safety of U.S. Treasuries: The 10-year is down 30 percent for the year (to 296 bps), and the 30-year down about half that, standing at 398 bps (see figure). A common refrain heard among market commentators is that with Europe in the throes of a sovereign debt (and now possibly full-blown financial) crisis, this is a flight to quality, and that the U.S. is remains the best of the bunch of bad options.

Prospects daily: President Obama to sign financial reform bill... Europe's bank stress test results to publish July 23rd

Important developments today:

1.  Oil and equities rise on economic growth optimism

2.  European regulators set to publish results of stress tests on region’s banks

3.  Malaysia’s annual consumer price inflation accelerated to 1.7% in June

 

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