U.S.: $1.5tn in student loans present fiscal risks; $1tn in leveraged loans vulnerable to rising interest rates ; Banking flows to the UK weaken since the Brexit referendum; Inflation under control in most key EMs; but central bank independence under scrutiny in many countries; RMB gains as a global reserve currency; foreign investor demand for bonds shifts from China to other EMs

Interest in our capital flows work has risen sharply since the EM sell-off, with many asking where and how much foreign investor positioning has changed. Foreign capital flows to EM are a key, but incomplete, part of the positioning story, since they capture buying and selling, but not all the valuation changes in between. We unveil a new database that adds valuation changes to our existing flows work, giving, to our knowledge, the most complete and up-to-date EM positioning snapshot. It is most complete since it is based on official balance of payments data across EM. It is timely as it incorporates high frequency tracking of flows and valuation changes. Brazil is the most under-positioned EM, while South Africa is most over-positioned.

Activity will weaken as the fiscal stimulus reaches its limit and consumption contributes less to growth. Without corrective measures, Romania could re-enter the EU’s Excessive Deficit Procedure in 2019. The prevailing shortage of skilled workers will constrain investment and potential gro...