Key Points
A revival may still make this the decade of emerging markets that Morgan Stanley Investment Management flagged earlier this year...
The end of global rate hikes will help reduce volatility and support the carry trade, and that will benefit higher-yielding EM currencies and bonds, said Alvin T. Tan, head of emerging-market currency strategy at RBC Capital Markets in Singapore...
There is space for there to be some thinking about pre-positioning for those rate cuts, and space for the rates to come back in especially given how high real policy rates are at this point in time, especially out of Latam, she said.. Yield-hungry investors have already been piling into Indonesian bonds after the central bank all but ended its tightening cycle earlier this year, while its domestic coffers remain healthy from the rally in commodities..
Indian bonds are also looking attractive due to good growth, a potential rate cut later this year as inflation moderates, and a trade balance that has never been better, said Eric Lo, Asia fixed income portfolio manager at Manulife Investment Management in Hong Kong...
Weaker-than-expected inflation data last week boosted expectations for a rate cutIn Latin America, Brazil will announce retail sales for April, and Mexico will publish industrial-production numbers for the same monthThe Fed, European Central Bank and Bank of Japan all meet in the coming week, which may also influence emerging-market assets..
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