At Any Rate EM Fixed Income: Lessons learned from post Liberation Day markets
May 1, 2025
Jonny Goulden and Saad Siddiqui explore the shifting dynamics of Emerging Market Fixed Income, focusing on the effects of recent tariff changes and global economic implications. They discuss varying investor sentiments towards emerging markets, highlighting which countries are favored or frowned upon. The podcast also analyzes the performance of emerging market currencies amid rising risk aversion and the complex outlook for interest rates. Ultimately, they look at how expected rate cuts could reshape the landscape for credit spreads and market resilience.
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Tariff Impact Fuels Market Uncertainty
- The uncertainty around US tariffs' extent fuels global and EM economic outlook doubts.
- Despite easing post-Liberation Day, credit spreads remain wide, revealing uneven risk market reactions.
US Policy Factions Drive Volatility
- Market volatility stems from internal policy faction disputes rather than a unified direction.
- Near term, US recession risk remains the critical determinant for market direction.
EMFX Vulnerable Despite Dollar Trends
- EM currencies react typically to severe risk aversion with weakness, unaffected by dollar trends.
- Dollar's secular weakening usually coincides with strong EM growth, not the current tariff-hit environment.