INDL - Could Falling U.S. Rates Elevate Emerging Market Returns?
2024-02-03 09:12:00 ET
Summary
- Emerging market assets were resilient in 2023, gaining ground despite conflict in the Middle East, concerns over slowing economic growth in China, and the US dollar’s strength against other regional currencies.
- Lower US interest rates have often strengthened EM regional currencies against the US dollar.
- We don’t know if history will repeat itself, but with rates at or near their peak, this might be an opportune time to give EM assets a closer look.
Emerging Market Assets Have Performed Well Following Rate Peaks
Past performance does not guarantee future results. The rate cycle is represented by the Fed fund target rates since 1995. EM equities and EM currency are represented by the MSCI indices, EM debt and EM local-currency debt are represented by JPM indices. Data is re-based to $100 at the peak point for each rate cycle. As of November 30, 2023 (Source: Bloomberg, J.P. Morgan, MSCI and AllianceBernstein (AB))