A sharp increase in U.S. Treasury yields and a stronger U.S. dollar have weighed on emerging assets, but BlackRock argued that a gradual Federal Reserve rate hike could limit further gains in yields and the USD, and the risks have already been baked into emerging assets.
Meanwhile, emerging market assets have already struggled and may be past their lowest point. The EM segment could slowly improve from here with strengthening current account balances, rising commodity prices and better fundamentals.
“From a technical perspective, Matt Maley of Miller Tabak wrote in a Wednesday note that the EEM is testing lows it last saw in November, hovering just above $34,” according to CNBC.
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Tom Lydon’s clients own shares of EEM.