BIS Quarterly Review: Carry Off, Carry On

Carry off, carry on

The BIS Quarterly Review includes analysis on recent developments in financial markets, life insurance, global alignment and trade, capital flows to EMEs and global banking statistics.

Overview

• Carry off, carry on 
  Markets' hypersensitivity to macroeconomic news and the unwinding of leveraged positions resulted in sharp but short-lived volatility.
  • Box A: Markets' increasing response to labour market conditions in the United States
  • Box B: The valuations of tech stocks: dotcom redux?
  • Box C: Hedge fund exposure to the carry trade
  • Box D: Sizing up carry trades in BIS statistics

Special features

• Shifting landscapes: life insurance and financial stability
  by Fabian Garavito, Ulf Lewrick, Tomas Stastny and Karamfil Todorov
  Low-for-long interest rates have squeezed life insurers' profit margins and increased their exposure to riskier assets, raising financial stability risks.

• Deconstructing global trade: the role of geopolitical alignment
  by Han Qiu, Dora Xia and James Yetman
  Trade restrictions against geopolitical adversaries pose a significant threat to globalisation, reducing trade volumes between them and limiting the pool of trading partners.

• The US dollar and capital flows to EMEs
  by Gaston Gelos, Pietro Patelli and Ilhyock Shim
  The US dollar's impact on emerging markets' local currency flows has grown, with a depreciating dollar boosting investments.

• International finance through the lens of BIS statistics: bank exposures and country risk 
  by Bryan Hardy, Patrick McGuire and Goetz von Peter
  BIS international banking statistics help understand banks' exposures to country risk events like sovereign defaults, crises, wars, sanctions and natural disasters.
  • Box: The structure of the BIS consolidated banking statistics (CBS)