Interesting chart via a recent IMF report:
The chart above comes from Gary E., who also sends along this commentary:
Angel Gurria, Mexico’s external debt negotiator in the 1980’s and
-90’s and later Finance and Foreign Minister, (now Secretary-General of the OECD) used to take a beating
from the arrogant bankers he was forced to sit across the table with.
Wow, the tide turned! Now the banks are begging the governments they
once called "deadbeats" for capital. Beware, my emerging market
friends, once (or maybe if) the G7 christens their ‘inflation fighting
aircraft carrier’, the tide will turn.
unlike the 1970’s, EM is almost purely an inflation trade. And have you
seen Eastern Europe’s current account deficits? Bulgaria’s 21 percent of GDP
CA deficit financed by foreign real estate speculators? Nevertheless, look at
how the trade of buying historical highs and selling historical lows has paid.
Angel Gurria must be laughing now – about "20-year old traders in tennis shoes."
Spreads relative to historical highs