Unhedged Are emerging markets back?
Oct 15, 2024
Aiden Reiter, an expert in emerging markets and finance, joins the discussion to dissect the complexities of these economies. He emphasizes that lumping all emerging markets together is misleading. The conversation dives into Brazil's economic resurgence and explores how lower U.S. interest rates make emerging market bonds attractive. They also analyze the switch from dollar-denominated to local currency bonds, shedding light on the unique challenges countries face. Plus, there's a cultural critique segment dissecting a thought-provoking show.
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Emerging Markets and US Rates
- Emerging markets typically favor lower US interest rates, as this makes their higher-yielding bonds more attractive.
- A strong US economy coupled with lower US rates is generally positive for emerging markets.
Defining Emerging Markets
- The term "emerging markets" is broad, encompassing diverse economies like Brazil and South Korea.
- It generally refers to non-Western European, US, or Canadian economies that were previously developing.
Shift to Local Currency Debt
- Many emerging market governments have shifted from issuing bonds in dollars to their local currencies.
- This reduces the impact of dollar fluctuations and US interest rate hikes on their debt.