Below are two charts of the Emerging Markets space. As we all know, Emerging Markets have been taking a real beating since February.
We have had the China trade war situation, Turkish economy imploding as well as volatile assets ranging from Latin America to South Africa. As we await the Fed later today, the two most important Emerging Markets charts according to us are: the EEM US and the JPM Emerging Market FX.
Both these charts are down substantially since February highs, but both have also managed rebounding lately. EEM US is currently trading just above the 50 day average and is “flirting” with the huge negative trend since February. Investors have learnt the hard way to hate this space so watch a possible break above the negative trend carefully.
The JPM Emerging FX index is showing a similar picture to the EEM US, although not as strong. As Fed later delivers their message, be sure to watch the Emerging FX space.
Source: charts by Bloomberg
As for the Fed the market expects today’s FOMC meeting to be eventful, with a 25bp rate-hike, to a range of 2%-to-2.25%. The board will release an updated Summary of Economic Projections and Chairman Powell will have a press conference. UBS writes:
“We think the statement will highlight the strength of the US economy but acknowledge the downside risk to the outlook from trade tensions”.