Manage episode 286577436 series 2536921
Emerging markets are precariously balancing on a tightrope as they attempt to manage the rebound in global growth expectations versus a rise in US Treasury yields, which reflect repricing of both expectations and real risk premia.
Encouragingly, the stress in EMs caused by February’s reflation has been limited so far, with EM rates most directly affected, EM equities most resilient, and EM credit as well as FX in-between.
Ehsan Khoman, Head of Emerging Markets Research (EMEA), believes pro-cyclical EM assets remain resilient compared with their performance during other taper tantrums given (i) their higher cyclical sensitivity to the robust global economic recovery and rising commodity prices; (ii) a resilient Chinese growth backdrop; and (iii) robust EM external balances vis-à-vis previous flare-ups.
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