Emerging markets – a threat or an opportunity?
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Emerging markets opened the year strongly on the back of a positive global growth outlook, low and stable inflation, rising commodity prices and, more importantly, a weak dollar. Emerging market (EM) currencies appreciated against the dollar, EM equities rallEmerging markets – a threat or an opportunity?
Emerging markets opened the year strongly on the back of a positive global growth outlook, low and stable inflation, rising commodity prices and, more importantly, a weak dollar. Emerging market (EM) currencies appreciated against the dollar, EM equities rallied, while EM monetary authorities were on the path of cutting policy rates thus sustaining the momentum in the local currency bond market performance at least up until the end of the first quarter. However, the tables soon started to turn as the trade rhetoric out of the US administration has significantly disturbed the outlook on global trade. At the same time, the increasing expectations of the effects of fiscal stimulus on the economy are underpinning the tightening monetary policy stance in the US. Despite the weaker-than-expected jobs report for the month of April, average hourly earnings and unemployment have been on a positive trajectory for several months, while inflation has been slowly approaching the two per cent target level. US treasury issuance has accelerated during the first quarter, increasing the total amount of US government debt by circa $370 billion by the end of April, while the securities held by the... Read more
