How will emerging markets emerge from inflationary pressures?

Strong US recovery could impact EM

The strong US recovery and associated reflation pressures may present challenges for parts of the emerging markets universe. This is most obviously visible in US Treasury and, to a lesser extent, German Bund markets. Here, fears that an overshoot in inflation could trigger a change of course by the US Federal Reserve (Fed) - and, to a lesser extent, the European Central Bank (ECB) - have led to some interest rate volatility and a general rise in real and nominal yields this year.