Now that the Federal Reserve (Fed) has raised rates, investors may start to view emerging market debt in a new light.
The market appears confident that Federal Reserve rate hikes will be gradual in 2016, and we believe this could be storing up some shocks for the new year.
Expectations that the Federal Reserve (Fed) will raise interest rates have increased markedly following the October Federal Open Market Committee (FOMC) meeting, but what does this mean for bond investors?
We review a turbulent year for the global economy which endured dramatic falls in the price of oil, geopolitical tension in Europe, a stockmarket crash in China and ends with the Federal Reserve considering raising interest rates for the first time in nearly a decade.
Economic and Strategy Viewpoint
In this month's Viewpoint our economists cut their global and European growth forecasts for 2016, examine the uneven recovery in emerging markets and look at what the risks are to the world economy.
In the latest infographic Schroders economists examine the factors that could tip the global economy into recession, the problem with the UK's proposed 'tax-credit' reforms*, what's driving risk appetite among investors and the corruption scandals crippling Brazil.
Despite Friday's strong jobs data, we see little need for the Federal Reserve to aggressively tighten monetary policy.
A moderately more hawkish Federal Reserve—which on Wednesday opened the door wider for a December rate hike—will perhaps stall a recovery in emerging market currencies, but the global search for yield will likely keep dollar denominated emerging market debt from retreating in price substantially.
The Federal Reserve’s (Fed) decision to delay raising interest rates in the wake of fears over the health of China’s economy highlights the conundrum facing central bankers, so when will interest rates rise and will I be dead before rates match GDP growth rates (“neutralise”) again?