More on the move to safe havens and contagion in high yield

Today’s Commentary
A few weeks ago, I wrote about the slowing of Chinese growth and the rout in commodity currencies, something that affected both developed markets and emerging markets that were leveraged to Chinese growth. But over the past few weeks, the concern has become emerging markets. The Fed’s tapering is only a proximate trigger. Much of the selloff has to do with political issues and macro imbalances in specific markets, just as the European sovereign debt crisis was about specific macro vulnerabilities after the Dubai World trigger. The question now goes to contagion from private portfolio shifts. The move to safe havens may have begun. And now evidence is amassing that investors are shifting away from all riskier assets, not just emerging markets.
In my weekly markets theme...


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