Fed rate moves not behind capital flight, says Pimco strategist
The first United States interest rate rise in almost a decade is already priced into emergingmarket assets, meaning capital outflows and other disruptions are now down to country specifics, a senior strategist at global bond fund firm Pimco says.
Tony Crescenzi said capital flight from countries such as Brazil and Russia was now more a reaction to political issues, weak commodity prices and, in the latter instance, the Ukrainian war, than investors positioning for the US Federal Reserve's expected increase in the funds rate as early as next month.
He said this global movement of investment capital has been under way since Ben Bernanke, then chairman of the US Fed, warned markets of the gradual winding down of monetary stimulus, sparking the now-famous "taper tantrum" of mid-2013. His successor, Janet Yellen, has since been telegraphing the eventual timing of what is called interest rate "normalisation".