The global sell-off reflects the resilience of the US economy and concerns about the inflationary impact of President-elect Donald Trump’s economic policies. The United Kingdom has suffered disproportionately in light of rising concerns about its budget and current account deficits amid weak GDP growth, hampered by fiscal policy, and inflation still above 2%.
Higher borrowing costs and weak GDP growth could undermine UK fiscal assumptions, increasing the prospect of tax rises.
Emerging market bond and equity fund outflows exceeded USD60bn last year, close to a record and the funds face further headwinds in 2025.
China’s ten-year bond yield kept falling despite the wider sell-off due to fears of the severity of its cyclical and structural downturn.
Indonesia’s surprise rate cut accentuates acute emerging market tensions between bolstering growth and preserving financial stability.
