Fed rate moves not be­hind cap­i­tal flight, says Pimco strate­gist

The Pak Banker - - COMPANIES/BOSS -

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".

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