Wall Street Banks Anticipate Growth in Emerging Markets Amid Dollar Weakness

According to Odaily, major Wall Street banks are preparing for renewed success in emerging markets, driven by expectations of a weakening dollar and a surge in investments in artificial intelligence. These favorable conditions are anticipated to further boost emerging markets, with local currency bonds offering investors a 7% return, marking the best performance since 2020, and currency indices rising over 6%. Morgan Stanley strategists highlight that as the U.S. economy slows, the Federal Reserve may further cut interest rates, supporting continued market growth. The bank advises clients to maintain long positions in emerging market local currency bonds, projecting an 8% return by mid-2026. For emerging market dollar bonds, they forecast a "high single-digit" increase over the next 12 months.