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26 Apr 2016
EM and commodity prices reprieve are a short-term phenomenon - BBH
Research Team at BBH, notes that there is a sense among many investors that the reprieve for emerging markets and commodity prices are a short-term phenomenon.
Key Quotes
“They worry that it is not sustainable. From January 21 through last week the MSCI Emerging Market equities rallied nearly 25%. The price of WTI rebounded 70%, as has iron ore prices.
The rally in some major equity markets, like the US S&P 500 and the UK's FTSE have completely retraced the sharp losses seen in the first several weeks of the year. The MSCI World Index (major markets) rebounded 16% from the lows seen in on February 11 through last week's highs.
The risk is that as the FOMC meets this week, the condition of the global capital markets may be as good as it gets. By the time the June meeting comes into view, the risks mount of greater instability.
While appreciating the global context that the Fed operates in is important, a strategy that puts too much weight on global developments may take control of US monetary policy away from the Federal Reserve and give it to the UK, Greece, Turkey, the IMF, and countless other places.”
Key Quotes
“They worry that it is not sustainable. From January 21 through last week the MSCI Emerging Market equities rallied nearly 25%. The price of WTI rebounded 70%, as has iron ore prices.
The rally in some major equity markets, like the US S&P 500 and the UK's FTSE have completely retraced the sharp losses seen in the first several weeks of the year. The MSCI World Index (major markets) rebounded 16% from the lows seen in on February 11 through last week's highs.
The risk is that as the FOMC meets this week, the condition of the global capital markets may be as good as it gets. By the time the June meeting comes into view, the risks mount of greater instability.
While appreciating the global context that the Fed operates in is important, a strategy that puts too much weight on global developments may take control of US monetary policy away from the Federal Reserve and give it to the UK, Greece, Turkey, the IMF, and countless other places.”