The impact of the European Commission decision to escalate the ‘rule of law’ procedure against Poland to its third and final stage.
The escalation in tensions between Warsaw and Brussels over reforms that threaten the independence of Poland’s judiciary is having a muted impact on sentiment in financial markets. More important are investors’ bullish stance on emerging markets (EM), and expectations that the ECB is in no rush to withdraw monetary stimulus.
The dollar index against other currencies has fallen to its lowest level since May 2016, providing a major fillip to emerging market assets.
Sentiment towards developing economies is buoyed by the prospect of persistently low interest rates.
The severe escalation in US-North Korean tensions is having only a muted impact on financial markets, judging by the Vix Index ‘fear gauge’.
