Emerging Markets
Emerging-market currencies fell for the first time in a week as a deepening slump in commodity prices hurt the revenue outlook for countries from South Africa to Russia. Argentine securities gained after Mauricio Macri’s victory in runoff presidential elections.
Fed Decision
The probability that the Fed will raise the benchmark rate at its December meeting rose to 72 percent on Monday, according to futures data compiled by Bloomberg. That’s up from 50 percent at the start of this month. As the U.S. plans to tighten policy, speculation is growing that the European Central Bank will increase stimulus to spur inflation.
“Emerging markets are under pressure as the U.S. raising interest rates in December is a done deal,” said Kenix Lai, a foreign-exchange analyst at Bank of East Asia Ltd. in Hong Kong. “The dollar will get stronger while China’s economic fundamentals haven’t shown any signs of improvement.”
MSCI Emerging Markets Index
The MSCI Emerging Markets Index has fallen 12 percent this year and trades at 11.3 times 12-month estimated earnings. That’s a 30 percent discount to the MSCI World Index of developed-country shares. The premium investors demand to own emerging-market debt over U.S. Treasuries narrowed three basis points to 375, according to JPMorgan Chase & Co. indexes.
Source: Bloomberg
