A rerun of the 1997 Asian Financial Crisis? HSBC's chief economist sees significant similarities
The 1997 Asian financial crisis culminated in recessions in economies throughout the region, amid market turmoil characterized by currency collapse, capital flight and banking failures. Now, Asia's financial environment bears some striking similarities to the period immediately before the crisis, according to HSBC's chief economist Frederick Neumann. Surging U.S. bond yields, a weak Japanese yen and tech optimism dominated the financial environment in the lead-up to the crisis, Neumann wrote in an Aug. 31 note. Neumann highlighted elevated U.S. Treasury yields as a key similarity with the period before the 1997 crisis. U.S. Benchmark 10-year bonds , for example, climbed from 5% in October 1993 to around 8% in November 1994. Even in April 1997, yields were at about 7%, some 200 basis points above where they had been four years prior, Neumann noted. Today, 10-year Treasury bond yields have climbed from a low of 0.5% in August 2020 to around 4.79% early Tuesday. "Granted, th...
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