Barclays(US:BCS)2025-05-06 11:35Summary of Key Points from the Conference Call Industry Overview - The document discusses the outlook for Emerging Markets (EM) economies and assets, highlighting uncertainties primarily related to US tariffs and their impact on investor appetite for risk [1][6][50]. Core Insights - Investor Sentiment: The appetite for beta risk among investors remains subdued due to ongoing uncertainties, particularly from US trade policies [1][6]. - EM Credit Performance: April saw significant volatility in EM credit spreads, but the Bloomberg EM USD sovereign index delivered small positive total returns of approximately 0.2% [9][11]. - Mexico's Economic Situation: Mexico's Q1 GDP growth was 0.2% quarter-on-quarter, narrowly avoiding a technical recession, with mixed sector performance [27][51]. The economic momentum is negatively impacted by tariff uncertainties [27][32]. - Inflation Trends: Headline inflation in Mexico is expected to decline below 3% by mid-year, driven by base effects, while core goods inflation shows signs of rebound [32][33]. - Central Bank Policies: Banxico is expected to cut rates to around 7.25%, with markets likely pricing terminals closer to 6.50% as growth risks intensify [42][78]. Investment Recommendations - Colombia Credit Trade: A recommendation to switch from Colombia 2031s to Colombia 2036s due to an abnormally steep 5/10s spread curve caused by recent supply issues [70][73]. - Bolivia Bonds: A recommendation to sell Bolivia 2028s due to deepening economic crises, including inflation and political instability [71][73]. - EM Rates: Continued recommendation to receive 3y TIIE-F, anticipating potential spread compression versus the US [77][78]. Additional Considerations - Geopolitical Risks: Ongoing geopolitical tensions, such as those between India and Pakistan, could impact market sentiment and capital flows [67][68]. - Global Economic Outlook: The overall global economic outlook is deteriorating, with EM economies facing challenges from US trade policy uncertainties [50][52][54]. - Rating Agency Actions: The trajectory of EM ratings has become balanced, with both upgrades and downgrades occurring, indicating a cautious outlook from rating agencies [17][24]. Conclusion - The document emphasizes the need for differentiation in investment strategies within EM markets, focusing on idiosyncratic opportunities while navigating a challenging macroeconomic environment [22][50].