US recession concerns, the market sell-off and EMs

Fears of a US recession have rattled EM equity markets at a time when EM economies themselves are showing more pronounced signs of weakness. Most EM currencies have held up well, suggesting a dovish tilt may come from EM central banks – particularly those in East Asia. Mexico is a key exception though; the sell-off in the peso calls into question our view that Banxico will cut rates on Thursday. The good news for EMs is that financial vulnerabilities have continued to diminish, making them well placed to weather any more severe deterioration in global risk appetite.

Our US and Markets teams will be holding a Drop-In today at 0830 ET/1330 BST to address recession fears and the outlook for stocks and bonds. Register here for the 20-minute online briefing.