Risk ratios weekly update – June week 1

I have updated the risk appetite ratios. I’d like to highlight two of them :

1] Emerging Markets vs USA

Emerging markets are recovering vs US markets.
Is it a sign of the “Risk Trade” appetite recovering, or of a slowing US economy ?

2] Junk Bonds strength

Still showing strength. US mid to large caps are healthy.
It’s too early to panic over the reports of a slowing US economy.

All ratios available here


3 Responses to Risk ratios weekly update – June week 1

  1. franckcad says:

    Emerging Vs Developed: Do you see any relation with the latest efforts to pro and against a maintained under control Chinese currency ? or is the Chine currency related values here diluted within the mass ?

    • China is almost 17% of EEM (Link), the emerging markets ETF i’m using. So an appreciation of the CNY could have a material impact on this ratio.
      However despite all the talking about the CNY/USD exchange rate, it has actually been extremely stable in the recent past. Have a look there
      According to my back of the envelope calculation, that makes a 1.5% range since the beginning of 2011. Essentially nothing.

      When China decides to revalue the CNY, it’ll definitely shock this ratio. But i don’t think it’s going to happen anytime soon.

      Hope it answers the question.

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