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The forces unleashed by the US election results continue to drive the capitals markets.  The combination of nationalism, reflation and deregulation are seen as good for US equities and the US dollar.  It has not been so kind to US Treasuries, where the 10- and 30-year yield has risen about 32 bp this week coming into today’s federal holiday that closes the bond market, while the stock market is open.

The rising US yields, anticipated trade policy, has hit emerging markets particularly hard.  Many Asian countries are predisposed to manage their currencies, and the downside pressure on them has seen a wave of intervention today, according to reports.  Contrary to ideas of “race to the bottom” or “currency wars” were “everyone” wants weaker currencies, a number of Asian central banks are believed to have sold dollars and bought their own currencies to slow the descent.

Flows out of the emerging markets are one of the important themes to have emerged in recent days.  The MSCI Emerging Market equity index fell for the third consecutive session.  The 2.4% decline so far today brings the three-day decline to almost 6%.  The index is at its lowest level since July.