Emerging Markets Strategy Weekly: The Fed wants it steeper

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Emerging Markets Strategy Weekly: The Fed wants it steeper

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30 Jul 2026 10:35:20 ET │ 36 pages

Emerging Markets Strategy Weekly

The Fed wants it steeper

CITI'S TAKE

Luis E Costa, CFA AC

It feels like a market that may try to sell some USD in the short-term, +44-20-7986-9757

provided that our assumption of a Fed on hold for the coming months stays luis.costa@citi.com

current. Short-term noise doesn’t quite eradicate our theory of a medium-

term compromise between US and Iran. On the Fed - We believe the Fed will Rohit Garg AC

be comfortable to keep rates unchanged throughout the year. The cautious +65-6657-3471

rhetoric by chairman Warsh will likely persist, even if there is some rohit.garg@citi.com

moderation in growth/labour in the coming months. Value equity factors

have been outperforming growth factors for the past months. Value Donato Guarino AC

overperformance versus growth is typically associated with the following +1-212-723-3298

regime attributes: rising or elevated interest rates; late-cycle or early donato.guarino@citi.com

recovery environments; inflationary regimes; risk-on with a cyclical tilt.

Bhumika Gupta AC

Asia — We share our views on EM Asia FX post FOMC. Separately, we reassess IDR +44-20-7986-5933

following BI governor’s resignation and provide an analysis on SGD rates in the wake bhumika1.gupta@citi.com

of MAS slope steepening this week. AC Alexander Rozhetskin

CEEMEA — The oil-sensitivity in CE rates is back up again. Despite the recent and +44-20-7508-4787

undoubtedly serious flare up in Middle East tension, we maintain the view of alexander.rozhetskin@citi.com

medium-term resolution (even though we believe geopolitical risk in the region is AC Ivan Riveros,CFAnow coming back to pre-Iran conflict levels).