Another update to a really important chart for emerging markets, this one shows the median 5-year sovereign CDS premium across 14 emerging market countries. Basically it is a market-based measure of sovereign credit risk for emerging markets. As noted previously, the fact that the indicator has crossed up through its 200-day moving average is key, particularly against the backdrop of softer macro data for EM and ongoing rate hikes and quantitative tightening from the Fed (and thus, a stronger US dollar). As I showed in yesterdays chart on EMFX, the path of the US dollar is going to be key for EM risk assets, and that path points to caution at this point.
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