With compressed risk spreads, this means that borrowing costs for many private-sector borrowers remain very low. The spreads over German yields for European sovereigns have continued to fall. This suggests that actions by European policymakers have had more influence on European markets than actions by the US authorities. This is as one would expect, but it hasn’t always been the case in the past.
Moreover, not all emerging markets are experiencing the same pressure. Some that experienced considerable turbulence in the middle of last year, when tapering was first mooted, have seen less of that recently. This owes something at least to policy responses in those countries in the intervening period.