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International Capital Markets Published by the International Monetary Fund II. Developments and Trends in the Mature MarketsSince the last review of developments in international capital markets, the mature international markets have been dominated by four related developments: large capital inflows into dollar fixed-income markets; the continued appreciation of the dollar; a convergence of interest rates to relatively low levels—and a compression of yield spreads—including in high-yield corporate and emerging markets; and further advances in the major equity markets. The background against which these developments occurred was one of a stable macroeconomic environment, characterized by widespread convergence to low inflation rates, and in some cases price stability, lingering disparities in growth rates, and continued fiscal consolidation. Intermittent periods of market tensions in currency and bond markets were associated with uncertainty about the sustainability of the appreciated value of the dollar, monetary policy, progress toward EMU, and the resolution of financial sector problems in Japan. |