Macro: Asian recovery as strong as ever
- In Emerging Asia and LATAM the recovery has been strong and activity in many of these countries is now back to levels prior to the global credit crisis. The recovery is remaining very fragile in most CEE countries.
Rates and yield: At a turning point
- Over the last few months Emerging Market yields have dropped further, but within the last couple week jitters in global financial markets have begun to push up markets rates – for example in Hungary and Turkey.
- The monetary easing cycle is coming to an end in many Emerging Markets, and the G3 central banks are likely to begin scaling back Quantitative Easing in the coming year. This is likely to put upward pressures on market rates and yields.
FX: Nervousness is sneaking back
- Even though global liquidity conditions continue to support risk taking, there has been some nervousness in global financial markets over the last couple of weeks.
- Looking ahead, although investors are still in “risk seeking” mode, there is the possibility of renewed jitters as seen over the past month. We continue to favour the LATAM and Emerging Asian currencies over the CEE currencies.
