EDITOR'S LETTERJohn Stepek
Wobbling into crisis
This week’s antics in emerging markets just prove the truth of the old market saying: “money goes where it’s treated best”. When yields the world over are being squeezed lower as printed money chases asset prices higher, investors have to travel far to find acceptable returns.
If that means lending to Rwanda for ten years at a rate of just under 7% (as investors did last April), so be it. What could go wrong in a world propped up by endless quantitative easing (QE)?
But when there’s even a hint that the squeeze on yields might stop – or worse still, reverse – investors’ appetite for exotica collapses. Why lend to the Rwandan government, or risk investing in Turkey, when the promise of higher interest rates in much safer countries looms on the horizon?
• Read the full editor’s letter here: Wobbling into crisis.