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Markets continue to adapt to the incoming Tapering by the Federal Reserve through an ongoing re-balancing in international portfolios. The EU peripheral assets were among the most benefited, supported by some signs of bottoming out of the sovereign rating cycle.
Complacency should be ruled out as economic growth expectations remain fragile and debt levels remain high especially in developed markets. The still necessary de-leveraging process and fiscal consolidation will continue challenging for economic growth
The Emerging Markets assets have initially absorbed the initial uncertainty about the end of the ultra-loose Monetary Policy in the USA during last June through flexible exchange rates and lower vulnerability levels. Looking ahead, we expect the US tapering to advance gradually, supported and guidance by the improvements in the communication skills by the western Central Bankers