Feb 19, 2019

The globe goes dovish

Rubem Novaes, the new president of the Bank of Brazil. Photo: Evaristo Sa/AFP/Getty Images

The reversal of quantitative tightening has now gone global.

The big picture: Emerging market central banks are now the most dovish they have been since 2009, Bank of America Merrill Lynch strategists said. Their findings were based on language in various central bank statements.

  • Since the Federal Reserve's dovish turn in January, other central banks have followed suit, including the European Central Bank, Bank of England and Bank of Japan, with emerging markets now joining the action.
  • "EM central banks have turned the most dovish since 2009 because of the mounting fears of a sharp slowdown evident across Asia and Europe in particular," David Hauner, head of emerging EMEA economics at BAML, tells Axios. "The source of the slowdown is weakness in China."

The latest:

The move away from tightening policy comes as global debt levels have reached more than 300% of the world's GDP and emerging markets have taken on an increasingly unsustainable debt load.

  • The world is now "pushing at the boundaries of comfortably sustainable debt," IIF's managing director of policy initiatives Sonja Gibbs told Axios last month.

Why it matters: Loosening monetary policy tends to boost economic growth but also weaken local currencies and create asset bubbles. That puts added stress on countries' debts, which for many emerging markets are issued in dollars, euros or renminbi rather than their own currencies.

  • That means that if things don't go well, they increase the likelihood of defaulting on their sovereign debts, endangering bondholders around the globe.

Go deeper: Emerging markets go mainstream

Go deeper

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 3:30 a.m. ET: 1,203,923 — Total deaths: 64,795 — Total recoveries: 247,273Map.
  2. U.S.: Total confirmed cases as of 3:30 a.m. ET: 312,237 — Total deaths: 8,502 — Total recoveries: 14,997Map.
  3. Public health latest: CDC launches national trackers and recommends face coverings in public. Federal government will cover costs of COVID-19 treatment for uninsured. The virus is hitting poor, minority communities harder and upending childbirth.
  4. 2020 latest: "We have no contingency plan," Trump said on the 2020 Republican National Convention. "We're having the convention at the end of August."
  5. Business updates: Restaurants step up for health care workers. Employees are pressuring companies to provide protections during coronavirus.
  6. Oil latest: Monday meeting among oil-producing countries to discuss supply curbs is reportedly being delayed amid tensions between Saudi Arabia and Russia.
  7. Education update: Many college-age students won't get coronavirus relief checks.
  8. 1 🏀 thing: The WNBA postpones start of training camps and season.
  9. What should I do? Pets, moving and personal health. Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  10. Other resources: CDC on how to avoid the virus, what to do if you get it.

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World coronavirus updates: Confirmed cases top 1.2 million

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

The number of novel coronavirus cases surpassed 1.2 million worldwide Saturday night, as Spain overtook Italy as the country with the most infections outside the U.S.

The big picture: About half the planet's population is now on lockdown and the global death toll was nearing 64,800, by Sunday morning, per Johns Hopkins data.

Go deeperArrowUpdated 4 hours ago - Health

U.S. coronavirus updates: Death toll surpasses 8,500

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

Recorded deaths from the novel coronavirus surpassed 8,500 in the U.S. early Sunday, per Johns Hopkins data. The death toll in the U.S. has risen over 1,000 every day for the past four days, since April 1.

The big picture: President Trump said Saturday America's is facing its "toughest" time "between this week and next week." Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said U.S. deaths are expected to continue to rise during this period.

Go deeperArrowUpdated 4 hours ago - Health