A
11 April 2013 – Fears that quantitative easing may come to
an end are raised when minutes of the Fed’s March meeting
showed several members of the Federal Open Market
Committee “thought that if the outlook for labor market
conditions improved as anticipated, it would probably be
appropriate to slow purchases later in the year and to stop by
year-end.”
B
19 April 2013 – The markets are encouraged by information
from China’s State Information Center which indicates that
the Chinese economy may rebound in the second and third
quarters of 2013. China’s GDP rose 7.7% in the first quarter of
2013 and a recovery in China and the associated consumption
will provide increased demand for emerging market exports.
C
May 1 2013 – Fears over the end of quantitative easing are
allayed as the U.S. Federal Reserve indicates it will keep
buying bonds at a monthly pace of USD85 billion while
standing ready to raise or lower purchases as the economy
changes. Additionally, the European Central Bank lowered
its main refinancing rate to 0.50% from 0.75%. Both
developments bode well for emerging markets and the
EMBI+ spread narrowed as a result.
D
20 May 2013 – Slowdown fears in the emerging markets
as Brazil’s announces that its economy will grow below 3%
in 2013. This is followed by the revision of Brazil’s rating
outlook to “Negative” by S&P on 7 June 2013. Brazil is likely
to suffer its third year of modest economic growth, with GDP
likely to expand only 2.5% in 2013 (after growing 2.7% in 2011
and 0.9% in 2012). Emerging market spreads widen.
F
18 June 2013 – EM spreads explode as President Barack
Obama said Federal Reserve Chairman Ben S. Bernanke
has stayed in his post “longer than he wanted,” one of the
clearest signals the central bank chief will leave when his
term expires. The fear is that a new Fed chairman might have
a different view of stimulus and put an end to quantitative
easing. Also contributing to the widening of emerging
market spreads is the downgrade of Venezuela’s credit rating,
reflecting the government’s diminishing ability to implement
measures to reverse declining GDP growth, rising inflation,
and weakening external liquidity in the context of growing
political disagreements within the administration.
G
24 July 2013 – Equity and debt markets brace for labor data
which they fear may indicate a recovering US economy which
would in turn precipitate the withdrawal of quantitative easing.
H
18 August 2013 – Following military action by Syria against its
own citizens, there is an increased likelihood that the United
States is about to go to war with the Middle-East nation.
Spreads widen substantially.
I
9 September 2013 – With a last minute proposal brokered
by Russia, the standoff with Syria ends. Additionally, at
September’s FOMC meeting, the decision has been made not
to end quantitative easing. Spreads narrow as the financial
markets rejoice.
J
23 September 2013 – Spreads widen as investors fear that the
U.S. Congress would be unable to pass the upcoming
federal budget.
E
10 June 2013 – Standard and Poor’s Rating Services revised the
outlook on its long-term rating of the United States of America
to stable from negative. Reactions are mixed but it brings some
stability to the EMBI+ spreads, ending the prior widening.
17