ESGD - Fiscal Dominance: The Clarifying Lens For EM (And DM) Bonds

2024-01-24 05:00:00 ET

Summary

• Fiscal dominance is an economic condition that arises when debts and deficits are so high that monetary policy loses traction.
• EM central bank policy rates were consistently higher, and EM central banks were earlier to the latest global hiking cycle.
• Geopolitics have economic implications for EM and DM, and economics has implications for geopolitics.

In this white paper, we explore emerging markets' superior fiscal and monetary policy stance and why it is leading to outperformance over their developed markets counterparts.

It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so" - Mark Twain

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