The iShares JP Morgan USD Emerging Markets Bond ETF saw $709.5mn in outflows in the week ended November 26, the biggest withdrawal in two months. The withdrawals coincided with a 2.6% drop in the ETF, the worst week since March 2020. Bloomberg notes that most of the withdrawals came on Tuesday, a day after Fed Chair Jerome Powell was reappointed for a second term. Powell being reappointed is considered hawkish, expecting a quicker pace of monetary tightening. The other chunk of withdrawals came on Friday after the Omicron variant worries spooked markets. Citigroup strategists note, “We can’t see a positive environment for EM, as many EM countries will be last in line for vaccine that might be produced to counteract”.
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