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Emerging Market Debt Update

Emerging markets (EM) came under pressure this week as Brexit negotiations and the Italian budget took centre stage. The Federal Reserve (Fed) kept rates on hold but reiterated its plans for further gradual increases, all but ensuring a December hike. EM currencies were down on the week despite the recent US mid-term results which should ultimately prove to be a positive tailwind for the asset class. Oil prices slumped yet again despite Saudi promises of supply cuts next year to deal with the growing imbalances in the oil markets. Brent crude ended the week down 10% and has continued its decline in the last few days. This trend needs to be closely monitored as there are growing voices trying to compare the most current period back to late 2015, when weak oil and a slowing China weighed heavily on risk assets.