Iran conflict rattles global markets, JPMorgan pulls back on EM
JPMorgan just dialed back its optimism on emerging-market currencies and local bonds, following the US attack on Iran.
The move comes after a sharp drop in the MSCI emerging currency index—its biggest single-day fall in four months—with currencies like the Hungarian forint and Polish zloty hit hardest.
Geopolitical tensions and oil risks
Geopolitical tensions are shaking up global markets, raising the risk of spillover to the global economy via oil.
If the conflict affects oil markets, it could increase spillover risks.
JPMorgan dialed back the scale of its overweight recommendations on emerging-market currencies and local bonds, citing heightened uncertainty.
Short-term caution prevails
Emerging-market currencies are highly positioned, but with rates dropping and credit getting pricey, strategists say it's time to play it safe—at least for now.
While long-term trends look solid, short-term caution is winning out as everyone waits to see how this conflict unfolds.