At Any Rate EM Fixed Income: Noise versus Signal
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Feb 13, 2025 Explore the dynamic forces shaping emerging market fixed income, including the impact of tariffs and geopolitical tensions. The podcast highlights the resilience of emerging market currencies and market strategies amid trade uncertainties. It delves into the relationship between the U.S. business cycle and geopolitical risks, offering insights into the influences on currency movements. Additionally, the discussion touches on current strategies in countries like Ecuador and Argentina, underscoring the need for adaptability to political and economic shifts.
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Rotating Factors Impacting EM Markets
- EM markets have been impacted by several rotating factors.
- These include AI, tariffs, US economic strength, the Fed, and geopolitical issues like Ukraine and Russia.
Three Channels of US Impact on EM Fixed Income
- The new US administration's impact on EM fixed income can be analyzed through three channels: tariffs and trade, geopolitics, and US domestic policy/business cycle.
- All three channels have been active, with geopolitics, including situations like Ukraine/Russia and Panama, being more impactful than initially anticipated.
Strategy for EM Fixed Income
- Maintain a cautious overall market direction, use tactics based on valuation and positioning, and consider idiosyncratic trades less influenced by US headlines.
- This approach combines market direction, tactical implementation, and specific opportunities.