Halister News

(Bloomberg) -- JPMorgan Asset Management is positive on emerging-market local-currency bonds even though the asset class faces short-term headwinds from a potential rebound in the dollar, Jasslyn Yeo, Singapore-based global market strategist, says in briefing.

• Co. favors bonds with higher real yields such as Brazil, India, Russia and Indonesia; in terms of FX, co. likes Brazilian real, Russian ruble and Malaysian ringgit
• Co. is positive on fundamentals of EM as growth is still in early cycle and inflation has fallen in most of countries after EM FX stopped depreciating
• EM central banks are likely to still maintain easy monetary policy
• Despite this year’s rally, EM FX are still cheap
• Co. sees the rebound in USD to be short term as markets price in more Fed rate increases before having another leg down
• U.S. 10-year yield forecast to climb to 2.6%-2.8% by end of first quarter of 2018 from current rate of 2.38%
• Co. sees low risk of over-tightening by major central banks as inflation remains subdued and financial conditions remain accomodative
• READ: JPMorgan Asset prefers equities vs bonds; likes EM high yielders

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net