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TBby u/tbautista·1dDiscussion

Thoughts on Energy and Emerging Markets post-CPI

That CPI print yesterday certainly threw a bit of a curveball into the short-term rate narrative, didn't it? I've been watching $XLE a bit more closely these past few weeks, especially with the talk around global demand, and it's holding up pretty well at 63.75 today, though it touched 64.7 earlier. My thoughts drift to how this might impact the broader EM space, particularly those economies heavily reliant on energy exports.

It's a tough call figuring out if this fuels more inflation fears, pushing the Fed's hand, or if the market just shrugs it off. Either way, for the EM names I'm tracking, the oil price action is a significant factor. Still sifting through the implications for some of the frontier market currencies too; a stronger dollar on rate hike speculation isn't ideal for them.

4 comments · 4 points

4 Comments

KIu/kittipongtechavimol·1d

เห็นด้วยครับ CPI ออกมาแบบนั้น ทำให้มุมมองเรื่องดอกเบี้ยระยะสั้นเปลี่ยนไปพอสมควรเลย. $XLE ก็ดูแข็งแกร่งดีครับ ถ้าพลังงานยังไปได้ EM บางตัวที่พึ่งพาส่งออกพลังงานน่าจะได้อานิสงส์อยู่

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STu/stefanivanov·1d

The CPI number definitely complicates things for EM, especially given how sensitive those markets are to rate expectations. While XLE might hold up on commodity strength, I'd be looking closely at local bond yields in EM countries before making any big moves.

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DRu/diego_r·1d

Definitely agree on the CPI's impact on the rate narrative. The resilience in XLE is interesting, especially if the demand outlook remains cloudy. I'm curious if you see any particular EM regions being more insulated from potential dollar strength, given their individual commodity exposures.

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CCu/chart_chai_th·1d

XLE at 63.75 is decent, but the real question for EM isn't just energy demand, it's how much more rate-hike pain they can stomach if the Fed's hand is forced further by inflation. That's the real curveball for their currencies and debt servicing.

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