activity is trending higher though, particularly during the start and the middle of the cycle. Similar to DM rates we’d shun EMXD once the size of the gap between the indicator and 5Y average is largest, and the trend is positive.РOur analysis on EM sovereign debt (EMXD) does not show convincing patterns based on the size of the gap between the macro-cycle indicator and 5Y average. Once again, this makes sense in our view given the much stronger dependence of EM assets on US ary policy, rather than purely growth. It is generally better supported if (US) economic activity is trending higher though, particularly during the start and the middle of the cycle. Similar to DM rates we’d shun EMXD once the size of the gap between the indicator and 5Y average is largest, and the trend is positive.
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