Since tapering discussions pushed up yields in the US, this has led to a steepening of yield curves across the developed world. The US has seen the greatest steepening, which argues for higher growth in the US ahead.

However, the implied tightening in global dollar availability and the reassessment of risk brought on by higher US yields has had more varied effects across the emerging world. Current account deficit countries, such as Turkey, India and Indonesia have seen their curves flatten. Indonesia has raised rates twice in recent months to contain rising inflation from a weaker rupiah and reduced fuel subsidies. Turkey also raised rates this week in a bid to try to prevent capital outflows.

Deficit countries, specially those with low import cover, will find themselves having to push rates increasingly higher as the market prices in higher US yields.