2000-05-17 Fed hike

Daily Brady Bond Trading Commentary

Wednesday May 17 2000 

Fallout from the Fed rate hike weighed debt and equity markets Wednesday. Most emerging markets debt prices slid, as investors remain scarce and the future interest rate picture cloudy.

 Mexico's booming GDP figures released Tuesday (7.9% Q1 growth) provided further encouragement that the country could endure higher U.S. interest rates as well as a possible transition in government. Yet, investors are mostly sidelined, as further rate increases should keep the market capped over the near term. We continue to believe that the prospects for EM debt may brighten in coming months, once the market believes the Fed has done its job and some of the political uncertainties have been removed through national elections.

Contributed by

Credit Lyonnais Securities (USA) Inc.

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