So this is probably a good time to reassess your carry trades.
As noted, a seemingly innocuous event (weak French 30Y auction) sparked a dramatic selloff in bunds earlier this morning, as German 10Y yields suddenly spiked to their highest levels since January of 2016:
That had immediate knock-on effects across Eurozone bonds and it quickly spilled over into equities as the DAX and Eurostoxx dipped.
Between that and the rising tide of geopolitical event risk, one has to wonder if it’s time to abandon EM – at least until we get more clarity on North Korea and Syria and until DM tantrum risk has subsided.
Below, find a particularly timely piece from Bloomberg’s Andrew Janes, out just hours before this morning’s bund bloodbath…
History shows emerging market investors should deeply fear the potential for coordinated global monetary policy tightening.