Risk Reward Is Favorable in EM Credit: Morgan Stanley’s Sheets

The video discusses the emerging market credit landscape, highlighting the lag in yield pickup compared to equities and developed market bonds. It emphasizes the importance of global economic recovery and technical factors like fund flows. The potential impact of geopolitical risks, particularly US-China relations, on emerging markets is explored. The video contrasts the sensitivity of credit and equity markets to trade tensions, with a focus on LATAM and China, noting positive shifts in sentiment towards the Brazilian real and Mexican peso.

What is one reason for the favorable risk-reward in emerging market credit?

• Decrease in global economic growth

• Improvement in technical factors

• High investor confidence

• Increase in fund outflows

What is a potential outcome for bonds once the virus is contained?

• Decrease in bond gains

• Increase in geopolitical risks

• Further bond gains

• Stability in bond yields

Which market is more susceptible to uncertainties and trade tensions?

• Commodity markets

• Credit markets

• Equity markets

• Bond markets

What is the current view on the Brazilian real according to the transcript?

• Negative

• Bearish

• Neutral

• Positive

How is Mexico's economy linked to the United States?

• Through trade agreements

• Through cultural exchanges

• Through economic data

• Through political alliances