NEWS / Foreign Exchange

15 British sailors and weaker US growth

March was an eventful month for Emerging Markets...

• It has been a dramatic month in the Emerging Market universe. The sell-off in risky assets that began at the end of February continued in the first weeks of March, with the high yielding currencies suffering.
• However, in the second half of March everything reversed: high-yielding currencies rebounded, the yen weakened and equities started to perform relative to bonds again. It seems that the crisis with a rise in risk aversion is over for now.

...US growth and geopolitical risks will set tone in April

• The recent data flow out of the US has, at best, been mixed. The US growth picture has turned more negative in the past month. We still think that US growth will remain in place, but a re-acceleration towards trend is not on the cards before H2 and this could weigh negatively on Emerging Markets assets in the coming months.
• If the deadlock between Iran and the UK carries on it will continue to underpin oil prices. If it gets worse, global risk appetite may decline.