JP Morgan head of Asia investment strategy, Alexander Wolf, says rising US yields should be seen as a positive for EM assets
Wolf says that "we're favourable on emerging markets in 2021 and don't think the Georgia runoffs materially change the outlook". Adding that EM will continue to be supported by a weaker dollar and strong recovery momentum in growth.
Expanding on the dollar weakness narrative, Wolf argues that the prospect of additional US stimulus and further widening of the US current account should pin the greenback lower on depreciation pressure.
In a way, one can replace 'EM' with 'risk' and you have your cover story in the currencies space as we begin the new year. This is the main consensus right now but as warned at the end of last year, things may not necessarily play out so straightforward.
