The IIF has prepared a brief paper on our expectations for the incoming Biden administration’s approach to financial regulatory policy in advance of President-elect Joe Biden’s inauguration.

EM corporates have racked up $4 trillion in FX debt since 2007, bringing total FX exposure to $7 trillion; More in store:  current USD weakness—with no Fed rate hike seen pre-2025—sets the stage for continued buildup in FX debt; EM corporate eurobond issuance reached $380 billion in 2020, up 10% from 2019; a record 95% of that was in USD; Most of this issuance was driven by non-financial corporates ($220bn), especially in China ($68 billion)

Tensions and disputes between the U.S. and China are likely to continue, possibly resulting in further sanctions. We focus on lessons learned from the U.S. sanctions policy towards Russia, and what those could mean for U.S. sanctions towards Hong Kong or China. 

As the mountain of negative-yielding debt hits new record highs, EM sovereigns continue to benefit from the search for yield ; Emerging markets set to rely increasingly on USD borrowing as abundant global central bank liquidity persists; China has significantly cut back its lending to low-income countries