Emerging markets: on fire: Brazil yields down 40bps, real nearly 3% up Rupee 2.5% stronger. Zloty 1.5%, rand 2% etc
That is from Pawel Morski. I’ve read many pro-delay-the-taper posts, and agreed with the (domestic) analysis in most of them, but I haven’t seen anyone address the um…shall we call it a trade-off?…here.
The optimistic reading is that those are sustainable gains based on higher U.S. growth, and thus higher demand for developing country exports, but it’s very hard to get the numbers to add up, or anything close, for that kind of explanation. More likely the pricking of those bubbles has been delayed. Is that good or bad? (What happened to caring most about the poor?) To even raise such a question means we probably should be agnostic about what is going on, and that is hardly the most popular attitude in the economics blogosphere when it comes to monetary policy.