Tail risks fading, but still on the radar
Following the EU summit, market reaction has been cheerful and the euphoria has
inevitably spread over to EM assets supported by clean technicals and high cash
holdings among funds. Yet while we think the tail risk events are fading, they very
much remain on our radar. We maintain our cautious stance and would not chase
the rally. We are concerned that in Europe, implementation fatigue may surprise a
market that has already priced in a very positive outlook.