PGIM Fixed Income's Cathy Hepworth: How Trump's policy agenda will impact emerging markets

Markets are diversified

In attempting to assess how emerging markets will be impacted by the policy agenda of US President Donald Trump, we need to assess the knowns and unknowns.

We have a good idea the new US administration will target select countries/regions with tariffs to attempt to protect and promote US industries; seek to limit, and even reverse, immigration; use tax policy and deregulation; promote a strong US dollar. The consequences will likely be at least an initial increase in inflation, which could slow the Federal Reserve's ability to deliver rate cuts. It means US rates could be higher for longer (though still directionally headed lower) and support a strong dollar, especially as the European Central Bank is more dovish and growth in the US is ...