...Fuel to the Fire: Emerging Markets (EMs) are becoming an increasing source of risk to global growth as the collapse in commodity prices and political shocks exacerbate a secular slowdown. Fitch Ratings' latest forecast for global growth of 2.3% in 2015 is the weakest since the global financial crisis in 2009. Against this backdrop, the Fed's looming tightening of monetary policy after an unprecedented period of historically low rates will add to the macroeconomic and external financing pressures on EM countries. EM Credit Markets Turning: EM bonds were boosted in the last decade by international investors' search for yield and increased funding disintermediation in local debt markets. This makes EM borrowers vulnerable to rising US rates and the reversal of previously strong capital flows. Key EMs Cross-Sector Review: Fitch reviewed 19 EM countries selected based on their weights in the JP Morgan EMBI and CEMBI indices in order to identify cross-sector sensitivities to rising US rates....
