Reuters- JP Morgan is recommending investors take advantage of the latest emerging markets sell-off to add exposure to the asset class, despite the risk of a possible interest rate rise by the U.S.Federal Reserve later this year.
The bank argued in a report on Wednesday that a strong rebound in global economic growth, and not inflation, has been the main driver behind the recent jump in U.S. Treasuries yields.
Global growth is often seen as a positive factor for the exports of emerging economies, but the sharp increase in the yields on Treasuries this month has sparked a sell-off in riskier assets that has erased all emerging debt gains for the year-to-date.
“We look for opportunities to add exposure and position for a rebound in emerging markets carry trades as we expect emerging markets currencies appreciation pressures to endure and emerging markets fundamentals remain positive, JP Morgan said in the report.
