Old market hands always have half an eye on EM bonds and currencies. It’s there that fires often start. That’s a concern when we look at the chart above.

In blue we see a basket of 20 EM currencies which has slumped to a record relative to the MSCI Emerging Markets Index. Currencies have fallen faster than equities as risk appetite for riskier assets weakens and the USD strengthens.. When the two moved out of step in October 2007 and January 2011, shares slid 66 % and 28% respectively, within a year or less.