(from my colleagues Dr. Win Thin and Ilan Solot)
The rebound in oil prices and the sliver of hope of a peace treaty in Ukraine is serving to soften a few of the trends in EM assets in recent months.  We doubt that this is the start of a new trend, and more likely just a positioning adjustment. Although oil can continue to correct higher, we think the downward pressure will remain intact. And even if an agreement in the Ukraine is reached, the implementation and longevity of a deal will be highly debatable.
The strong January US jobs report suggests that the Fed remains on track to hike rates around mid-year. Indeed, the data should allow the Fed to drop the word “patient†at its next meeting March 18, which would add to the negative EM sentiment.
Also, idiosyncratic developments in the major EM countries should continue to cast a pall on the asset class as a whole.  The institutional crisis in Brazil deepens as the government’s approval ratings plummet. Exit polls for the election in India’s capital, Delhi, suggest a setback for the ruling BJP. Lastly, continued jawboning of the central bank by the government is pushing USD/TRY to record highs.
Mexico reports January CPI Monday, expected to rise 3.09% y/y vs. 4.08% in December. It then reports December IP Wednesday, expected to rise 2.7% y/y vs. 1.8% in November. Real sector data is picking up, but inflation readings continue to ease. For now, we see steady rates from Banxico. However, official statements suggest a dovish bias remains intact.
China reports January CPI Tuesday, expected to rise 1.0% y/y vs. 1.5% in December.  China could report new loan and money supply data this week, but no date has been set. More easing measures are expected in the coming weeks, as the focus of policy is clearly on boosting growth.
South Africa reports Q4 unemployment and December manufacturing production Tuesday. The former is expected at 25.6% while the latter is expected to contract -1.0% y/y. Slow growth and falling inflation should keep the SARB on hold for now, but it move into dovish mode as the year progresses. Next SARB meeting is March 26, and data between now and then will determine whether we see a cut then.
