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Weekly investor research

05 March 2018

Emerging Markets (EM) inflation has fallen faster than nominal bonds yields in the past thirteen months, so real yields are higher today than in January 2017. This is good news for those who are already in EM local currency bonds. It is also an opportunity for those who have not yet entered to do so with a reasonable expectation of making good returns in the coming year. Meanwhile, the outlook for the US has deteriorated following the imposition of tariffs on steel and aluminium. While the specific tariffs do not materially change the US outlook, the fact that the US government is so inclined to intervene in free markets bodes poorly for the future. Latin America offers countless examples of what happens under populism and heterodox economic policies; investors ultimately end up paying.

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