Yield Curve Steepening Would Be Bigger Risk for EM Than Inversion, Mizuho's Varathan Says

The transcript discusses the dynamics of the yield curve, focusing on the risks of steepening versus inversion and its impact on emerging markets (EM). It highlights the vulnerability of EM currencies like the Indian rupee and Indonesian rupiah to oil price fluctuations and tightening dollar liquidity. The discussion also covers the Chinese authorities' approach to defending the renminbi against the psychological barrier of 7, balancing it with FX reserves management.

What are the potential risks associated with a flat yield curve according to the text?

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How does the steepening of the yield curve relate to US dollar liquidity?

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Which countries are mentioned as being exposed to oil risks?

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What is the significance of the psychological barrier of 7 in relation to the Chinese authorities?

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What trade-offs do the Chinese authorities face in defending the currency according to the text?

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