EM business cycles - growth, inflation, and policies - are on track and unlikelyto be disrupted by Fed repricing, in our view. We became more cautious inrecent months because of market risk-reward not economics. As far as EM pullfactors are concerned the upturn seems intact amid contained inflation andwith surprisingly good demand (and prices) for EM exports. While idiosyncraticimbalances prevented a stronger pass-through to EM in 2013-15 we expect astronger boost this time around on EM’s improved conditions.    In EEMEA we expect growth to continue to be robust, while inflation is not yeta threat in most countries with an exception of Turkey. We continue to seepositive growth momentum across the region, with CEE ahead of the pack,followed by Turkey and Russia, but see risk of further disappointments inSouth Africa. Turkey’s much feared political risk materialized in the form of thediplomatic row with the US, which we believe requires close monitoring givenpotential adverse impact on Turkish assets in case of further escalation. Lira’sunderperformance, if continued, would make us even more worried regardinginflation outlook and in turn monetary policy normalization could be postponedbeyond Q1 2018. In Russia, we expect inflation to continue to surprise on thedownside falling to less than 3% by end-2017. In South Africa, inflation maystill surprise to the downside in the near term and we have revised our terminalrate forecast for 2017 slightly to 6.75% from 7.00%, in reaction to the dovishInflation Report. We expect no rate hikes in 2018 for now. However, weremain concerned about the possible credit rating downgrade on the back offiscal slippages and political repercussions of the ANC December conference.    In CEE, strong domestic demand supported by improved European growth callfor withdrawal of policy support. We expect Czech National Bank to deliveranother hike this year. Hungary and Poland, however, are likely to remain onhold in the foreseeable future.    EMEA Fixed Income – who is most exposed to core rate repricing? Althoughstill well below peaks, betas in 10Y EM local bonds to 10Y USTs increasedsharply in recent weeks as a result of core rates repricing. However, whilebetas increased for EMEA, they remained more or less stable in Asia and evendeclined across LatAm. Betas for EMEA are now higher than for LatAm. OurDB Strategy rates team does not expect a sudden spike in US treasuries.    However, the house view for 10Y treasuries with 2.75% by end-17 remainswell above forwards. This increases the risk for EM local bond markets tounderperform, particularly for those countries with historically high sensitivityto US rates and/or current short-term betas well below LT average betas. InTrade recommendations, Russian FI remains our preferred position in EMEAdespite the rally already seen. After being on the side lines for the last fewmonths we also re-enter a long-term constructive view on Turkish fixedincome on the back of the recent underperformance. Across CEE, we favourPoland while we keep our very cautious view on South Africa ahead of thebudget (Oct), credit rating decisions (Nov) and the ANC elective conference(Dec).

声明：如本站内容不慎侵犯了您的权益，请联系邮箱：wangshiyuan@epins.cn 我们将迅速删除。