FXStreet (Guatemala) – Analysts at Brown Brothers Harriman noted that recent US data puts Fed lift-off squarely back in play. “For now, we think investors should make use of any EM bounces to rebalance their portfolios.”
Key Quotes:
“We think EM assets are likely to remain under pressure, even though this event is almost fully priced in. Why? Because the pace and the scale of the Fed tightening cycle remain unknown. Until this becomes clearer, we think it will be hard for EM to get much traction.
Furthermore, sliding commodity prices will keep pressure on many of the major EM exporters, including Brazil, Mexico, and Russia. And the renewed swoon in commodities will likely bring China concerns back to the forefront, potentially weighing on wider EM sentiment. On the other hand, the prospects of more PBOC easing and perhaps more QE from the ECB and BOJ could help support global equities to some extent.
Whatever the pace and scope of Fed tightening is, we still believe it is very important for investors to continue focusing on the fundamentals and also on hedging out currency risk whenever feasible.”
(Market News Provided by FXstreet)