Conflicting Narratives and Widening Emerging-Developed Market Gap

By Blu Putnam, Chief Economist & Erik Norland, Senior Economist, CME Group

Conflicting Narratives

• Market volatility set to persist amid conflicting narratives.
• Equities weigh financial distress vs. optimism of reopening economy.
• Oil confronts supply cuts against drop in demand and lack of storage space.
• Gold likely to benefit from low short-term interest rates for a while.

The Widening Emerging-Developed Market Gap

• Investors in highly indebted nations banking on low short-term rates.
• In countries with low debt, investors expect rate cuts to be temporary.
• Rising debt in developed nations could widen rate gap with emerging markets.
• Emerging markets can mitigate pandemic damage with devaluation, rate cuts.