One factor behind global equity market jitters: the growing focus on credit risk. Credit spreads have widened only modestly in 2018, but look increasingly vulnerable to a trigger event. Rising rates highlight vulnerabilities in housing markets. Less reliance on hard-currency debt in EM Asia ex-China, but more in Africa/Middle East. 
 

Private sector balance sheets are susceptible, at varying degrees, to external debt rollover risk and lira depreciation. Under the currently improving, yet fragile, investor sentiment, Turkey’s sizable amortization payments will continue to expose the economy to high rollover risk through 2019. 

• Sanctions lowered capital flows to Russia permanently, limiting severely the ability of banks to borrow abroad.
• Risk of new sanctions put pressure on government flows.We assess scope for contagion from expanded sanctions.
• Foreign bank exposures to Russia shrunk significantly, and would be manageable under expanded sanctions.

Global debt declined by $1.5 trillion to $247 trillion ($187 trillion ex-financials) in Q2 2018-mainly driven by mature markets. In contrast, EM debt continues to rise, topping $71 trillion in Q2 ($60 trillion ex-financials).

China's current account has traditionally registered large surpluses, but has swung into deficit this year based on data from Q1 through Q3, adding to the case that the RMB could be overvalued and needs to depreciate.

Just as in 2015, our activity tracker points to a slowdown, "¦ even though official GDP figures remain broadly stable. We compare the current slowdown

Investors undeterred by the prospect of gridlock after the U.S. midterm elections China sees much weaker FDI in Q3, though exports have held up well F