In the EM equity space as measured by MSCI, Colombia (+5.3%), Peru (+3.7%), and Mexico (+3.3%) have outperformed this week, while Brazil (-3.2%), Egypt (-3.1%), and Thailand (-1.6%) have underperformed. To put this in better context, MSCI EM fell -0.7% this week while MSCI DM was flat.
In the EM local currency bond space, India (10-year yield -19 bp), Mexico (-12 bp), and Poland (-11 bp) have outperformed this week, while Brazil (10-year yield +29 bp), Hungary (+11 bp), and Argentina (+10 bp) have underperformed. To put this in better context, the 10-year UST yield fell 1 bp to 2.77%.
In the EM FX space, PHP (+0.3% vs. USD), PLN (+0.3% vs. EUR), and INR (+0.3% vs. USD) have outperformed this week, while TRY (-2.5% vs. USD), BRL (-2.0% vs. USD), and ZAR (-1.8% vs. USD) have underperformed. To put this in better context, MSCI EM FX fell -0.4% this week.
Reserve Bank of India cut its inflation forecast for the first half of FY2018/19 to 4.7-5.1% from 5.1-5.6% previously. It kept rates steady, as expected. There was one dissenter in favor of a hike. CPI rose 4.4% y/y in February, which is in the top half of the 2-6% target range. The RBI is likely to remain on hold for now, and markets are not pricing in a hike until 2019.