💵🔻Emerging Markets May Outperform On Further USD Downside: Cable FX Macro
- Rosbel Durán
- Sep 4, 2024
- 1 min read
Long-term studies show emerging market equities holding a negative correlation to the dollar, when measured MSCI EM Index vs Cable FX Macro Dollar Index
The negative coefficient has been persistent since the mid-2000s, while periods of R weakness are seen in 2015
The dollar has corrected over the last month, however, it remains on the upper end of its long-term range. Further weakness could support EM equities, which have lagged DM
A Bloomberg measure of developed market equities is tracking gains of 15.1% YTD, almost twice the advance of the emerging market index. Over the last month, EM equities outperformed DM before paring gains, as the August volatility spike did not hurt the former as much
Bloomberg data shows EM equities have received net inflows every week since mid-April. Ahead, the U.S. August labor report will set the tone for the next leg in the dollar and the EM index
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