{"id":35232,"date":"2018-06-19T07:00:29","date_gmt":"2018-06-19T12:00:29","guid":{"rendered":"http:\/\/olduvai.ca\/?p=35232"},"modified":"2018-06-19T07:00:29","modified_gmt":"2018-06-19T12:00:29","slug":"chasing-yield-during-zirp-nirp-evidently-starved-human-brains-of-oxygen-now-the-price-is-due","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=35232","title":{"rendered":"Chasing Yield during ZIRP &#038; NIRP Evidently Starved Human Brains of Oxygen. Now the Price Is Due"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"https:\/\/wolfstreet.com\/2018\/06\/18\/chasing-yield-during-zirp-nirp-evidently-starved-human-brains-of-oxygen\/\">Chasing Yield during ZIRP &amp; NIRP Evidently Starved Human Brains of Oxygen. Now the Price Is Due<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>See Argentina\u2019s 100-year dollar-bond and emerging-market \u201cturmoil\u201d as the Hot Money flees.<\/strong><\/p>\n<p>Let\u2019s be clear: It\u2019s not <em>just<\/em> Argentina. But Argentina is the most elegant example. The exodus of the hot money from emerging markets where cheap dollar-debts were used to fund pet projects and jack up leverage is \u2013 once again \u2013 in full swing. Cheap dollar-debt in emerging markets is an old sin that, like all old sins, is repeated endlessly. The outcome is always trouble. But during the act, it sure is a lot of fun for everyone.<\/p>\n<p>The exodus of the hot money is even gripping the non-basket-case emerging economies of Asia where it\u2019s causing the worst indigestion since 2008. <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2018-06-18\/emerging-asia-hit-by-biggest-foreign-investor-exodus-since-2008\" target=\"_blank\" rel=\"noopener\">Bloomberg<\/a>:<\/p>\n<blockquote><p>Overseas funds are pulling out of six major Asian emerging equity markets at a pace unseen since the global financial crisis of 2008 \u2013 withdrawing $19 billion from India, Indonesia, the Philippines, South Korea, Taiwan, and Thailand so far this year.<\/p>\n<p>While emerging markets shone in the first quarter, suggesting resilience to Federal Reserve tightening, that image has shattered over the past two months. With American money market funds now offering yields around 2% \u2013 where 10-year Treasuries were just last September \u2013 and prospects for more Fed hikes, the bar for heading into riskier assets has been raised.<\/p><\/blockquote>\n<p>\u201cIt\u2019s not a great set-up for emerging markets,\u201d James Sullivan, head of Asia ex-Japan equities research at JPMorgan Chase, told Bloomberg. \u201cWe\u2019ve still only priced in about two thirds of the US rate increases we expect to see over the next 12 months. So the Fed is continuing to get more hawkish, but the market still hasn\u2019t caught up.\u201d<\/p>\n<p>Emerging markets have responded to this new environment and a newly hawkish Fed with all kinds of gyrations, including raising rates in order to prop up their currencies. For example, the central banks of Argentina and Turkey hiked key rates to 40% and 17.75% respectively.<\/p>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Chasing Yield during ZIRP &amp; NIRP Evidently Starved Human Brains of Oxygen. Now the Price Is Due See Argentina\u2019s 100-year dollar-bond and emerging-market \u201cturmoil\u201d as the Hot Money flees. Let\u2019s be clear: It\u2019s not just Argentina. But Argentina is the most elegant example. The exodus of the hot money from emerging markets where cheap dollar-debts [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2251,1931,88,20565,12860,4254,4255],"class_list":["post-35232","post","type-post","status-publish","format-standard","hentry","category-economics","tag-argentina","tag-bond-yield","tag-bonds","tag-chasing-yield","tag-hot-money","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35232","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35232"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35232\/revisions"}],"predecessor-version":[{"id":35233,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/35232\/revisions\/35233"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35232"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}