Most emerging markets saw inflation surprise to the downside in May, bolstered by lower food costs, fiscal support, and declining oil prices. This supports a cautiously optimistic outlook for local currency debt despite lingering Fed hawkishness.
Key Takeaways
- 1.EM CPI data surprised to the downside in May due to softer food inflation, fiscal support measures, and increased inflation expectations.
- 2.Energy costs have fallen significantly, with Brent crude down approximately 30% over the last four weeks following geopolitical de-escalation.
- 3.The favorable combination of lower energy costs and downside inflation surprises supports a mildly bullish outlook for high-carry local debt markets.
Table of Contents
- What's driven the downside surprises to EM CPI in May?
- Disclosures & Disclaimer
- Multi-Asset Emerging Markets
- Performance this week
- Equity
- Fixed Income
- FX
- EM Performance: Equity
- EM Performance: Local currency debt
- EM Performance: External debt
- EM Performance: FX
- EM Relative Performance
- EM Performance: YTD total return breakdown
- Correlations
- Global Indicators
- EM Activity
- EM Inflation
- EM Monetary Policy
- Global Monetary Policy and Financial Conditions
- EM Sentiment and Positioning
- CTA positioning
- EM Valuations
- EM Earnings
- EM Carry-to-volatility ratios
- Total Financial Flows
- Monitoring Japanese Flows
- Disclosure appendix
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Authors
Edward ParkerAli CakirogluRamya R S
Securities
Brent Crude
Themes
Inflation SurprisesOil Price De-escalation
Regions
Asia PacificLatin AmericaSouth KoreaPhilippinesTaiwan