“That Sh*t Cray”: Emerging Markets, Fed Minutes Edition

Earlier this morning, we asked an important question: what did yesterday’s Fed Minutes portend for buoyant emerging markets?

To be sure, EM has demonstrated remarkable resiliency in the face of what is supposed to be the beginning of a Fed tightening cycle.

Attribute this resiliency as you see fit. That is, maybe it was the fact that the dollar had a terrible Q1. Or maybe it was partially due to the fact that the March Fed “hike” was actually a “cut” if you care to consult financial conditions. Or maybe no one is buying what the Fed is selling in terms of their intentions. Or maybe today’s portfolio managers are too young to remember what a tightening cycle actually is.

Whatever the case, the EM/DM divide was readily apparent during the first quarter with EM outperforming DM across assets (MSCI EM up c.5% more than MSCI World, EM credit outperforming DM HY credit by c.1.5%, and EM FX up 3.6% against the dollar).

Well in what we can only call “a sign of the times,” the Vanguard FTSE EM ETF got its biggest daily inflows since 2012 on Wednesday taking in $872.5M:


h/t Luke Kawa who had the following Kanye-ish assessment:

Cray” indeed.


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