Global Markets

Is EM FX intervention a threat to US Treasuries?

Global Markets Update
Written by Capital Economics Economist

More emerging market (EM) central banks may step in to support their currencies by selling reserve assets if risk appetite takes another turn for the worse. But unless China is forced into aggressive action to protect the renminbi, there is unlikely to be any noticeable impact on safe assets such as US Treasuries. Indeed, in the event of a major shock, safe-haven flows would probably ensure that Treasury yields fell.