Jun. 6 at 3:28 PM
IMF’s Gita Gopinath: In the early stages of the pandemic “central banks everywhere were moving in the same direction in the sense of easing monetary policy very quickly, but this time around the shock has differential effects"
“This time the challenge is going to be greater for them compared to the pandemic”
For emerging markets facing higher US trade barriers, the situation looks “more like a demand shock” which means slower inflation & growth
“When we have this kind of a divergence you could end up w/ tightening global financial conditions & emerging markets are particularly sensitive to such changes in global markets”
Emerging markets were “steering through the fog” given the volatility of President Trump’s trade policy, making the situation even more precarious
Natixis: Traditionally a weaker USD means less exports [for emerging markets], but cheaper funding costs. But now you have weaker exports but not cheaper funding b/c the long end of the sovereign [bond] curve is very high
$EEM