US Data Shock Is Now Coming for Emerging Markets
With the prospect of extended dollar weakness less certain, the EM rally is already being tested.
Border control area in Hong Kong: China may prove an EM exception, but it can only reopen from Covid once.
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Just how much has the world changed? US employment data at the end of last week revealed an economy in much better shape than had been widely thought, and prompted a big reappraisal in forecasts for the Federal Reserve’s fed funds rate. After a weekend to think about it, traders are continuing to step back from their bets that the Fed will make significant interest-rate cuts by the end of this year. Indeed, they now seem resigned to the notion that the fed funds target rate will be no lower in 12 months’ time than now.