Financial conditions in emerging East Asia weakened between 31 August and 5 November on the back of global inflationary concerns and a shift in monetary stance by the United States (US) Federal Reserve.1 The Federal Reserve announced that it would scale back its bond purchases beginning in November, while rising global inflation is also pressuring central banks in the region to consider tightening monetary policies. This has led to bond yields rising, currencies weakening, and risk premiums edging up in most emerging East Asian economies during the review period. Nevertheless, a positive economic outlook and still-accommodative policy stances have supported financial conditions in the region, as evidenced by positive foreign capital flows into regional bond and equity markets during the third quarter (Q3) of 2021.