At Any Rate EM Fixed Income: New year, no cheer
13 snips
Jan 10, 2025 Jonny Goulden and Saad Siddiqui dive into the volatile landscape of Emerging Market Fixed Income. They discuss the cautious outlook ahead of a key U.S. presidential inauguration and its potential impact on EM assets. The duo explores how shifts in U.S. yields influence capital flows, currency trends, and credit spreads. They also highlight notable fund outflows despite strong hard currency returns, while analyzing job growth trends in the U.S. and the complexities of the business cycle amidst economic uncertainties.
AI Snips
Chapters
Transcript
Episode notes
EM Fixed Income Performance
- EM fixed income returns were flat for the first 10 days of 2025, possibly turning negative after recent price action.
- Market volatility is driven by potential tariff policies, cyclical data, and business cycle indicators.
JPMorgan's Stance on EM Fixed Income
- JPMorgan started 2025 with a cautious stance on EM fixed income due to concerns about U.S. policy changes.
- Their focus is now shifting to specifics about the incoming administration's policies, especially tariffs.
EM Rates vs. US Treasury Yields
- While U.S. 10-year treasury yields rose significantly, the EM local bond index saw minimal increases.
- This gap suggests a potential catch-up for EM bonds, reflecting anticipated pressures on capital flows and monetary policy.