Bloomberg carrying an article in which Commerzbank emerging market strategist Quijano-Evans makes a strong case for the ECB QE nullifying Fed rate hike
While emerging markets just about everywhere else have tumbled on concern over US interest rate hikes, Polish, Hungarian and Romanian bonds and currencies have been gaining this quarter.
Bloomberg's recent survey showed that the European Union's eastern bloc will continue to outperform no matter what the Fed decides tomorrow
Underpinning their confidence is an assurance from Draghi that the ECB's €1.14trln QE programme isn't about to end. That stimulus more than counters any fallout from the first increase in US rates since 2006. VP Constancio's comments this morning will only have added to that view.
Says Quijano-Evans, who has been recommending clients take overweight positions in the region's Eurobonds and local currency debt for the past month :
" A Fed hike would probably accentuate those flows as core central and eastern European countries are more dependent on what happens in the Eurozone .
Draghi is more important than Yellen for central and eastern Europe."
A fair observation as we wait to see the fall-out from any Fed hike tomorrow
