Emerging markets are currently facing heightened volatility, with Brazil at the forefront due to its troubling fiscal situation. Concerns over fiscal stability have led to a selloff in Brazilian markets, prompting investors to exercise caution. According to Mark Cudmore, the current environment suggests that it may not be the right time to buy the dip in emerging markets. The political transition in the United States, with Trump's impending inauguration, adds another layer of uncertainty, making emerging markets a potentially more attractive trade in late January or early February when political and economic policies are expected to become clearer.
The VanEck Vectors J.P. Morgan EM Local Currency Bond ETF (EMLC), which focuses on providing exposure to local currency bonds from emerging markets, reflects these broader market concerns. As of 05:40 on December 18, EMLC is trading at $23.71, slightly above its last close of $23.60, but still near its 52-week low of $23.55, indicating cautious investor sentiment amid ongoing fiscal and political uncertainties.