Sep 23, 2026 · 19 min · 6 segments
In the latest episode of Rate Check, the hosts are joined first by Oliver Harvey (Head of CEEMEA and LatAM FX research). They start by discussing the rise in US yields above 5%, and why its drivers…
Shoki OmoriGuestOliver HarveyGuestHenry AllenHost
Shreyas GopalHost
So a couple of weeks ago, you set out a multitude of reasons why now one should be a little bit more cautious on the MFX after a great run.
US real rates going up was one part of it, but there's a plethora of arguments that you've set out as to why.
It's worth bearing in mind that up until now, emerging markets have been very resilient in the face of what has been a pretty significant sell off in core rates.
What could change that and could EM become a little bit more vulnerable? I think there are two schools of thought.
Are we seeing this big sell-off in rates because the world is worried about inflation? Are we worried about dollar debasement? Is that feeding itself into a weaker dollar? The dollar cycle, when we get a weaker dollar cycle, is usually very supportive of emerging markets.
And as you said, it's really been real rates that have led this sell-off in US rates rather than inflation.
In fact, if you look at the five-year, five-year US real rate, that's repriced by about 100 basis points since the start of the year.
And I think that may well be because the market is upgrading its view on potential US growth.
And of course, we have this extremely strong data earlier today, but we've also seen this incredible capex cycle due to AI in part, and this run of positive economic surprises.
So a couple of weeks ago, you set out a multitude of reasons why now one should be a little bit more cautious on the MFX after a great run.
US real rates going up was one part of it, but there's a plethora of arguments that you've set out as to why.
It's worth bearing in mind that up until now, emerging markets have been very resilient in the face of what has been a pretty significant sell off in core rates.
What could change that and could EM become a little bit more vulnerable? I think there are two schools of thought.
Are we seeing this big sell-off in rates because the world is worried about inflation? Are we worried about dollar debasement? Is that feeding itself into a weaker dollar? The dollar cycle, when we get a weaker dollar cycle, is usually very supportive of emerging markets.
And as you said, it's really been real rates that have led this sell-off in US rates rather than inflation.
In fact, if you look at the five-year, five-year US real rate, that's repriced by about 100 basis points since the start of the year.
And I think that may well be because the market is upgrading its view on potential US growth.
And of course, we have this extremely strong data earlier today, but we've also seen this incredible capex cycle due to AI in part, and this run of positive economic surprises.
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