Menu Close

Peso Panic! Massive Argentine Peso Plunge Deepens Emerging-Market Selloff (10Y Sovereign Yield Spikes 58 Basis Points)

The emerging market is more like a SUBmerging market.

(Bloomberg) — The brutal tumble of Argentina’s peso added to the list of concerns over the ability of developing economies to defend their currencies as the era of cheap money wanes. Emerging-market assets extended losses a day after the Federal Reserve’s more hawkish signals.

A measure of currencies in developing nations slid to the lowest since December, while the MSCI Emerging Markets Index sank — led by industrial and technology companies. The Argentine peso slumped more than 6 percent on reports of changes at the country’s central bank and after truck drivers began a strike. The Brazilian real dropped a fourth day as the impact of a massive sale of foreign-exchange swaps was short lived.

Developing-nation assets took a beating as signals of a slightly more aggressive pace of Fed hikes added to concern over further currency depreciation in developing economies. Meanwhile, the European Central Bank said a rate increase won’t come until the summer of 2019, though it announced it would end stimulus in December, setting the euro area up for an exit from years of heavy monetary support.

pesopanic

And with the Argentinian Peso Panic, we have their 10-year sovereign yield rising faster than Eva Peron’s popularity.

arg10

Their yield curve is … lumpy.

argyc

It is time to cry for Argentina.

 

Join the conversation and have a little fun at Capitalstool.com. If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

RSS
Follow by Email
LinkedIn
Share

Discover more from The Wall Street Examiner

Subscribe now to keep reading and get access to the full archive.

Continue reading