Cliffhanger.

Clearly, this was a week dominated by concerns about what the ongoing dollar rally and rising U.S. yields will ultimately entail for emerging markets. That’s a bit of a cliffhanger right now, although if you ask Morgan Stanley, you should be bargain hunting, apparently.

The bank’s Hans Redeker says valuations are nearing levels where “the risk-reward is starting to look more attractive in countries that have suffered from position squaring.” They also note that the exodus from funds and ETFs doesn’t seem to suggest folks are panicking. EM debt fund outflows fell to $1.3 billion in the week ending Wednesday (from $2.1 billion the week before) and ETFs saw inflows during the same period, the bank says.

The dollar rose for a fourth week in five, and hit a new YTD high on Friday:

DXY

10Y yields fell, providing a bit of respite after hitting their highest levels since 2011 earlier in the week.

10Y

30Y yields fell into the weekend as well, after passing 3.25 on Thursday:

30Y

Here’s Gundlach:

U.S. stocks were lower for the third week in four:

SPX

Worst week since March for the EM ETF:

EEM

Have a look at the iShares JP Morgan EM Local Government Bond ETF:

IEML

As Lisa notes, it’s hemorrhaging:

IEML2

For those interested in the full breakdown on how things played out for emerging markets this week, you can peruse the commentary and visual smorgasbord here:

Also this, from Eric:

Despite the dollar rally, WTI managed to log a third straight week of gains (six consecutive weekly gains for Brent) as Venezuela jitters and Iran concerns continue to cloud the supply outlook. Bottom line:

Crude

Speaking of cliffhangers, things are getting dicey in Italy as investors are now facing the reality of a populist coalition and what that may entail for the country’s fiscal outlook. This was the worst week for Italian bonds since 2015:

ItalyWeek

You can read (much) more on that story in the following posts:

Gundlach had something to say about this too:

Italian shares lagged their European counterparts for the week:

Europe

Recent stumbles aside, they’re  still doing quite well YTD:

MIB

Five-month low for the euro:

EURUSD

Four-month low for the yen:

USDJPY

Oh, and make-believe space tokens had a rough week despite Thomas Lee’s best efforts:

Bitcoin

 

 

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