Separate from the threat of Russian
sanctions, emerging markets remain at the
mercy of US treasury yields .
One takes one’s life in one’s hands in making a forecast
about the fate of treasury yields. After all, any
observer of markets since the financial crisis
knows that economists’ track record of
forecasting these yields is lacking.
A year ago, most predicted the ten-year yield would trade in
the 3.0 to 3.5 per cent range during 2017, yet it
spent most of the year wrapped comfortably
around the 2.3 per cent level.
Moreover, it is not
only the ten-year yield that matters, but also the
short-term rate and thus the slope of the yield
curve as it infuences the dollar and determines
the affordability of emerging market borrowings.
EU Forecast
euf:b18:75/nws-01