2000-03-02 Investors not intimidated

Daily Brady Bond Trading Commentary

Thursday March 2, 2000 

Emerging markets investors showed they were not intimidated by Friday's employment report and the possibility of a more prolonged series of Fed rate hikes.

Brazilians may have been getting long ahead of Carnival, but some U.S. accounts were active as well, bidding up Mexican paper in particular. The likelihood of a Moody's upgrade of Mexico to investment grade status before the end of April is now viewed as a near certainty, and obviously some people are looking for an announcement to come much sooner.

We remain constructive on Mexico and most of the EM asset class, but we are also wary that interest rates in the U.S. and Europe may still be headed in the wrong direction and were impressed by the sudden pick up in activity the day before the jobs report.

Global growth is a big positive for EM countries right now, but behavior of the debt will tend to be more like pure spread product (and less like equities) as credit spreads narrow like they have recently.

Contributed by

Credit Lyonnais Securities (USA) Inc.

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