The Fed is likely to reignite a wall of money to emerging markets, and our high frequency tracking of flows already shows a sharp spike. As the hunt for yield restarts, positioning in EM is a central question. South Africa is most over-, Brazil and Russia most under-positioned.

Our high frequency trackers show a substantial pick-up in flows, though the underlying picture is weaker than headline numbers suggest. The rebound is concentrated in China, with Mexico and Indonesia also up, while the flow picture to India, South Africa, Turkey and Thailand is weak, even after large outflows during the emerging markets sell-off last year.

Our trackers do not point to a convincing pick-up in flows beyond China, with flows to key emerging markets like India and South Africa quite weak, even after sizeable and persistent outflows during last year’s EM sell-off.

This year’s EM sell-off underscored the importance of FX valuation with markets, in dramatic fashion, going after meaningful FX overvaluations. At this point, our models signal neutral or cheap valuations for much of EM, so that currency misalignments are less of a risk factor as we approach 2019. But a positioning overhang in emerging markets remains a material risk factor, given the intensity of capital flows to EM resulting from G-3 monetary stimulus. This piece starts a series of Global Macro Views on EM flows and positioning, which we kick off today by looking at flows over the EM sell-off this summer.

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.

We turned more constructive on emerging markets some weeks ago, given that the EM sell-off eliminated some of the biggest FX overvaluations. But a

Argentina's Peso and the Turkish Lira have weakened substantially, with increasing concern in markets over potential contagion to other EMs. Non-re

Early this year we signaled rising EM risk , especially for Argentina and Turkey. We also flagged growing potential for contagion to the broader EM co

Changes in China's FX regime have been associated with capital outflows, notably the 2014 band widening and the "step" devaluation in August 2015.

A distinction is often made between hot money and more stable capital flows. We examine which non-resident capital flows to EM look most like hot mone