Oil Price Surge Upends Emerging-Market Disinflation Trade
- Vontobel will cut holdings in markets that rely on oil imports
- Bonds from India, the Philippines and Pakistan look vulnerable
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Just a couple of months ago, emerging-market assets were all the rage as inflation eased and interest rate-cut bets surfaced. The trade has all but fizzled out.
The rapid change has come about as oil rallied some 30% from the year’s low to alter the dynamics for developing nations. Costlier crude is reviving price pressures and damping hopes that interest rates will fall, while threatening to undermine the fiscal balances of energy importers.