Fears of False Start for Fed Leave Emerging Markets in Limbo
- EM assets trading as if US rates will remain higher for longer
- Fed impact eclipsed by risk of Trump return and China economy
A rental housing complex in Beijing.
Photographer: Na Bian/BloombergThis article is for subscribers only.
Price action in some of the world’s most risk-sensitive assets is signaling concern that the Federal Reserve’s decision to begin lowering interest rates may have been premature — or unsustainable.
Since the Fed kicked off its long-anticipated loosening cycle on Sept. 18 with a cut of 50 basis points, double the median forecast, emerging-market assets have traded as if borrowing costs in the world’s largest economy will remain high. That’s left developing world assets in limbo and headed for another span of underperformance.