Halister News

(Bloomberg) -- “Expectations had been building for more Fed rate hikes, yet we see the central bank proceeding only very slowly; this could underpin the rally in EM assets,” BlackRock Global Chief Investment Strategist Richard Turnhill, says in e-mailed note.

• Stronger U.S. jobs data have fueled speculation of more Fed rate hikes; expectations are overblown
• BlackRock sees Fed hiking in Dec., then proceeding cautiously given unevenness of domestic economic recovery, global growth uncertainties
• “We think the Fed might be willing to let the economy run hot before raising rates”; lower-for-longer outlook for Fed rates extends investors’ reach for yield
• It also buys time for EMs to implement structural changes, such as India’s recent tax reform and Indonesia’s renewed push for fiscal reform. This could enable select EMs to be more resilient when the Fed eventually normalizes rates
• BlackRock likes “EM debt, where spreads remain attractive”; neutral on EM equities
• “We prefer domestically-oriented stocks and EMs with reform momentum”