IMF Spring 2022 Meeting Takeaways

May 2022

 

Coming out of the Spring 2022 IMF meetings, we are looking to increase low-volatility spread duration and decrease some EMFX exposure.

Coming out of the Spring 2022 IMF meetings, we are looking to increase low-volatility spread duration and decrease some EMFX exposure.

The bad news of higher rates has been priced in by markets, but the bad news of weaker growth has not. The risk of a US recession is rising, because of a European recession, oil embargo risks and China’s zero-COVID uncertainties. The Fed's rate hikes are also a headwind. And, the Fed is unlikely to change its policy path soon. The fast increase in policy rates is with us all year, we think. The market has priced this in.

However, what the market hasn’t fully priced in, we think, are the risks to growth. Recession risks are mounting and the IMF seemingly remain unpriced by the market.

We come away from the IMF meetings looking to increase low-beta spread duration and decrease some EMFX. Click here for full commentary.

Any views expressed are opinions of the author at the time of writing and is not a recommendation to act.
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