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Little room for error

- "The past month’s rally has left emerging market spreads priced nearly to perfection."
- "The environment is likely to remain supportive of EM assets, but the upside/downside is looking increasingly asymmetric."
- "EM bonds have been a top performer, mostly from the Treasury rally, but also from relatively strong spread performance compared to other risk assets."
- "With this outlook, we prefer relative value opportunities, especially in high yield names. We continue to like basis in Venezuela, and now believe the 23s are the most attractive bond on the curve. Poor handling of new issuance will continue to hinder the credit, but the bonds offer a lot of upside. We also still like Argentina EUR-denominated."
- "Bond spread curves should continue to flatten as the long end of most curves still offers more value than the short end."

Citigroup_Emerging_Market_Debt_Outlook_20100820

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