Emerging markets (EM) underwent a sharp correction in April 2022 as the macro backdrop for the EM asset complex became more challenging amid growth fears emanating from China and a significant pick-up in inflation globally. Inflation in EM Asia, which had been reasonably benign, moved higher as well amidst surging commodity prices which fed through to the consumer price index (CPI). This prompted most of the EM Asia central banks to adopt a measured removal of the accommodative stance maintained thus far. In contrast, the Latin American central banks are at the late stage of their tightening cycles, while central and eastern European (CEE) central banks are in the middle of their cycles.
US CPI inflation surged yet again as the March headline CPI rose by 8.6% year-on-year (y/y). The US Federal Reserve became more hawkish and has indicated its intention to front-load interest rate hikes and normalise their balance sheet at a faster pace than initially projected. The rate hike expectations became more aggressive and based on the implied rate hikes priced in Fed Fund Futures, the policy rate is now expected to reach 3.0% by the end of 2022 (as of 29 April, source: Bloomberg); at the end of March, the market was pricing in a rate of 2.5% by year-end (see Figure 1). Demand for ‘safe haven’ assets, along with the support provided by higher interest rates saw the US dollar outperform against most EM and developed market (DM) currencies since the start of the year. Similarly, EM hard currency spreads widened as concerns around the debt servicing capabilities of a few EM countries increased, especially those economies rattled by current macro headwinds and idiosyncratic geopolitical events. Over April 2022, hard currency outflows were -$0.9bn, while local currency outflows amounted to -$2.9bn. (source: JP Morgan)
Before investing, consider the funds' investment objectives, risks, charges and expenses. To obtain a prospectus or summary prospectus which contains this and other information, call 1-800-997-7327, download a prospectus or summary prospectus now, or talk to your financial advisor. Read it carefully before investing.
Distributor: State Street Global Advisors Funds Distributors, LLC, member FINRA, SIPC, an indirect wholly owned subsidiary of State Street Corporation. References to State Street may include State Street Corporation and its affiliates. Certain State Street affiliates provide services and receive fees from the SSGA Funds.
THIS SITE IS INTENDED FOR U.S. INVESTORS ONLY.
No Offer/Local Restrictions
Nothing contained in or on the Site should be construed as a solicitation of an offer to buy or offer, or recommendation, to acquire or dispose of any security, commodity, investment or to engage in any other transaction. SSGA Intermediary Business offers a number of products and services designed specifically for various categories of investors. Not all products will be available to all investors. The information provided on the Site is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.
All persons and entities accessing the Site do so on their own initiative and are responsible for compliance with applicable local laws and regulations. The Site is not directed to any person in any jurisdiction where the publication or availability of the Site is prohibited, by reason of that person's nationality, residence or otherwise. Persons under these restrictions must not access the Site.
Information for Non-U.S. Investors:
The products and services described on this web site are intended to be made available only to persons in the United States, and the information on this web site is only for such persons. Nothing on this web site shall be considered a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction.