EM Matters:what’t new this month
摘要： May’sweakUSjobsgrowthsupportsourviewthattheFedischeckedintoamonetarypolicy‘HotelCalifornia’.Inthesho
May’s weak US jobs growth supports our view that the Fed is checked into a monetary policy ‘Hotel California’.
In the short term, the Fed’s inability to decisively lift off any further from the zero bound is EM positive…n … with the softer USD augmenting monetary policy space and reducing actual and perceived downside risks.
Longer-term, the US’s increasingly mature economic cycle in particular and weakening DM growth in general…n … spell greater trouble for EM and raise legitimate questions over how long the current sweet spot can last.
Exploiting the current window of opportunity to improve fundamentals is vital before bumpier conditions re-emerge.
Political dynamics are mixed in Asia. China continues to wrestle with the policy dilemma of reform vs. growth.
India and Indonesia continue with baby-step reforms; Thailand and Korea’s relative political inertia continues.
In LatAm, political dynamics remain strongly positive in both Brazil and Argentina.
By contrast, political developments in South Africa, Turkey & Poland are fuelling, rather than reducing, macro risk.
May,sweakUSjobsgrowthsupportsourviewthattheFedischec,HotelCalifornia,Intheshortterm,theFed
