Favored Emerging-Market Trade Loses Luster on Recession Fears
- Investors start to eye bets on rate cuts in emerging economies
- Goldman sees local rates outperforming, JPMorgan goes neutral
Shoppers browse produce at an outdoor market in the Tijuca neighborhood of Rio de Janeiro, Brazil.
Photographer: Maria Magdalena Arrellaga/BloombergThis article is for subscribers only.
Investors are rethinking what was the go-to trade in emerging markets at the start of the year: betting on rising short-term rates as rampant inflation forced central banks into action.
With global financial markets pivoting to strategies that take advantage of a recessionary environment, money managers are saying the developing world holds some of the best opportunities to profit from falling yields. Part of the allure is because emerging-market currencies got hammered amid a surge in the US dollar, which has just started slipping from its peak amid signs of an economic slowdown.