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Chart: Emerging Markets Sovereign CDS

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.

emerging markets sovereign CDS spreads

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