We begin with Brazil where economic and fiscal uncertainty is making international investors increasingly uneasy. 1. The latest industrial production report showed an 8.9% contraction. Source: Investing.com 2. The Brazilian real breached 3.75 to the dollar. Below is the percent move vs. the dollar over the past year. This is likely to worsen inflationary pressures as well as make US dollar denominated liabilities increasingly more expensive. 3. Here is how Brazil's dollar-denominated debt compares to other emerging economies. Source: @MxBtdr, Wolf Street 4. The 10-year domestic government bond yield broke above 14.75% as foreigners exit the market. Source: Investing.com Source: @BloombergEM 5. Sovereign CDS spread (5yr CDS shown) spikes on rising fiscal concerns. I would be surprised if we don't see more negative action from the rating agencies in the near future. Source: @markets; thanks Mike! Turning to China, I continue to be puzzled by the nation's policymakers with respect to the yuan exchange rate setting. Is China now strengthening the yuan? While some are reading this as a manifestation of a mysterious master plan, to me the decision makers simply seem to be lost. In fact this currency management looks more botched than the effort to manage the stock market. Source: barchart Similarly there is a problem in China's money markets. The overnight rates rose as a result of more capital outflows in spite of PBoC's recent liquidity injections. The overnight repo rate and SHIBOR are now above 2%. As the PBoC lowers its target lending and deposit rates, the actual overnight rates rise. The central bank is allowing monetary conditions to tighten while trying to ease across the board. Madness. Unease around China's economic trajectory is now visible in a number of global indicators. Here are a couple of examples.