EM growth needs to strengthen to reinforce rebound - RBS

Research Team at RBS, suggests that they have called for the reversal of the bearish EM tides at the beginning of March and even after the rally of the past months, they remain broadly constructive on EM carry and duration.

Key Quotes

“Yet, we are aware that the continuation of the EM recovery remains contingent on the improvement of the growth outlook. We review the growth outlook in this note and find that while some improvement is expected, EM growth remains fragile and external shocks could still damage EM strength – one therefore has to proceed with caution.

Yet, overall we still believe that long carry positions are still appropriate and we remain short USD/TRY, overweight SOAF 2041USD credit and received 9x12 South African FRAs.”