Morning Commentary: EM market pause continues ahead of Fed news; mandates eyed for Thursday

By Rebecca Melvin

New York, March 21 – Emerging markets remained in pause mode early Wednesday – as was the case on Tuesday – as market players await news from the Federal Open Market Committee meeting, which is expected to include an interest rate hike of 25 basis points and hopefully shed light on the policy inclinations of new Fed chairman Jerome Powell and the other bank officials going forward.

“I think people are squaring up positions. It’s all about the dots and the conversations. We’re waiting to see what happens there,” a London-based trader said.

U.S. stocks were little changed at late morning and U.S. Treasuries were lower, leaving the yield on the benchmark 10-year Treasury note up at 2.89%.

Depending on reaction to the Fed news, new issue announcements and pricings are expected to resume on Thursday. Among deals in the wings are the Ukraine’s agro-industrial MHP SE group’s new up to $500 million eurobond with an eight- to 10-year maturity and Globalworth Real Estate Investments Ltd.’s euro-denominated debt securities under its €1.5 billion Euro medium-term note program.

In secondary market dealings, spreads were generally “OK,” a market source said.

The Africa sovereign space bounced back from widening on Tuesday. Following widening of about 10 bps to 20 bps across the board, Senegal was 20 bps tighter on Wednesday, Ghana was better and Kenya was 10 bps to 15 bps tighter, following generally oversold conditions on Tuesday.

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