Emerging Markets Look to Vaccine Rollout, Stimulus for Next Spur

(Bloomberg) -- Emerging markets are closing in on the final phase of 2020 with investors anticipating further stimulus while keeping a close eye on the rollout of vaccination programs.

Continued support from central banks and optimism that coronavirus vaccine developments will sustain a global economic recovery next year have fueled a rush to riskier assets, sending gauges of developing-nation stocks, currencies and bonds to six straight weeks of gains.

While at least 10 central banks in developing economies are scheduled to set monetary policy this week, none will be as closely watched as the Federal Reserve. The suspense centers on whether the U.S. central bank will adjust its bond-buying program or alter its guidance for future purchases.

“Policy makers look poised to continue to support the recovery with fiscal action, and given persistently low inflation, we think central banks will keep policy rates low for years,” said Madison Faller, a London-based global investments strategist at J.P. Morgan Private Bank. “Such policy support will continue to drive investment outcomes and underlines our view that risk assets have room to run from here. A modestly weakening dollar has also led us to consider beneficiaries like emerging markets.”

Economic data will likewise serve as a guide on the progress of the global recovery. China will release a slew of economic data Tuesday that’s likely to show a continued rebound from the pandemic.

After the Surprise

Leaving the Door Open

Mexico, Colombia Decide

Data and Events

• China’s industrial production, retail sales and fixed-asset investment are all expected to see acceleration, according to Bloomberg Economics
• Indonesia and India will report November trade figures on Tuesday. Exports in the former are seen rising for the first time since June
• In what might be a welcome change for policy makers, India’s inflation numbers due Monday are likely to show a slowdown in November
• South Korean employment data on Wednesday may show joblessness edged higher in November
• Argentine inflation for November, scheduled for Tuesday, may show another relatively high reading for the month, despite currency and price controls, Bloomberg Economics forecasts
  • On Wednesday, investors will home in on third-quarter gross domestic product figures for insight on how the South American nation is faring amid the pandemic.

©2020 Bloomberg L.P.