Global Emerging Markets Weekly: EM, what to do if the Fed has to hike?

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Global Emerging Markets Weekly: EM, what to do if the Fed has to hike?

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Global Emerging Markets Weekly

EM, what to do if the Fed has to hike?

The View: EM, what to do if the Fed has to hike? 15 May 2026

Markets have started to price some probability of a Fed hike. High oil prices will likely Emerging Markets Weekly

continue to lead to global inflation upside surprises, and the Fed “interregnum” is coming Global

to an end. We think vol in EM is likely to pick up and advocate tactical caution. But we

also believe that structural USD weakness keeps EM in a buy-the-dip setup. – D. Hauner Table of Contents

Asia Economics: China – Reflation returns The View 2

The data points to a continued recovery in price pressures, with both headline and core Asia Economics 4

picking up. Still, soft domestic demand is likely to cap the upside in inflation, while Asia Strategy 6

resilient external trade reduces the urgency for additional stimulus. – A. Zhou, Y. He EEMEA Economics 8

EEMEA Strategy 10Asia Strategy: China – Marginal appreciation pressure

This year’s dividend payments for China would amount to c.US$61bn from June to LatAm Economics 12

August, slightly above last year’s level. It will be unlikely to revert the downward trend in LatAm Strategy 14

USD/CNY but could incrementally slow down the pace of the move. – J. Xue Sovereign Strategy 16

EEMEA Economics: South Africa – Inflation & political risk Credit Risk Premium Model 18

We spent 5-7 May in South Africa meeting government and local experts. We see risks CTA Monitor in EM 19

of higher inflation and political risks. We expect CPI of 3.8% in April, and a peak of 4.7% GEMs Macro Tables 21

in Feb 2027. That suggests SARB is likely to hike twice in May and July. – T. Rusike EM Alpha Trade Recommendations 24