homeeconomy NewsJahangir Aziz: US could go into deeper recession; EMs to face trouble only if dollar strengthens
Jahangir Aziz: US could go into deeper recession; EMs to face trouble only if dollar strengthens
Speaking in an interview with CNBC-TV18, Jahangir Aziz, Global Head-EM Economics, JPMorgan said, “The JPMorgan view is that if you look at the fair value of the 10-year rate, this is the overshooting of the fair value of the 10-year rate.”
Jahangir Aziz, Global Head-EM Economics, JPMorgan believes there is a risk of the US diving into a deeper recession in the long term. However, emerging markets (EMs) will face a problem only if the dollar strengthens, he told CNBC-TV18.
“This is the overshooting of the fair value of the 10-year rate,” he said.
Emerging markets are reasonably comfortable due to strong monetary policy, Aziz said, adding, that there is a possibility of the Indian economy slowing down in the second half of the current financial year.
Aziz's comments come in the backdrop of the turmoil in financial markets worldwide following a significant overnight increase in US yields. The 10-year yield reached a 16-year peak, at 4.95%, and nearly the entire yield curve, ranging from one month to 30 years, surpassed the 5% threshold. This surge in yields is primarily a reaction to robust retail sales data.
The escalating yields are exerting downward pressure on financial markets over concerns that a substantial portion of funds will be redirected towards treasuries, attracted by their risk-free returns of over 5%.
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Aziz believes the Reserve Bank of India's focus will now remain on liquidity tightening and foreign exchange intervention.
(with input from CNBC)
For more details, watch the accompanying video
(Edited by : Shweta Mungre)
First Published: Oct 19, 2023 2:26 PM IST
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