(Bloomberg) — Emerging-market assets widened losses as investors reconsidered their bets on when the Federal Reserve will start cutting interest rates.
MSCI’s emerging market index fell 0.6% on Monday, falling 0.6% across the region after Federal Reserve Chairman Jerome Powell said over the weekend that the U.S. may have to wait beyond March for the central bank to cut interest rates. It fell.
Emerging market currencies also fell, with the MSCI index falling by as much as 0.5%, its steepest decline since mid-January. The Chilean peso led the losses, falling to its lowest level since the final quarter of 2022, along with the Brazilian real.
“It’s all about interest rates. It’s a reversal of the bull market at the end of last year,” said Omar Garoudy, head of emerging markets trading at KNG Securities.
Chinese stocks, which make up the bulk of the world’s emerging market benchmarks, were trading volatile again after last week’s selloff as investors assessed policymakers’ pledges to stabilize markets.
Read more: China expands stock trading limits for quants and offshore units
After the close of trading in Asia, authorities tightened trading restrictions on domestic institutional investors and some offshore sectors, according to people familiar with the matter.
In Latin America, Paraguay tapped the international bond market with a 12-year dollar bill to buy back existing bonds, days after S&P upgraded the country to just one notch below investment grade.
Turkish assets largely coped with the central bank’s surprise shift in caution, with the lira falling 0.2% against the dollar. Data on Monday showed Turkey’s monthly inflation rate rose by the most since August, a rise that could test policymakers’ resolve to quickly rein in price rises after halting interest rate hikes last month. There is.
Senegal’s euro bonds plunged after President Macky Sall postponed this month’s presidential elections and lawmakers met to consider extending his term until a successor takes power. Barclays economist Michael Café and strategist Andreas Kolbe said in a note on Monday that it was too early to completely abandon a positive trajectory, but uncertainty was rising for West African markets. .
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