News: NAB LIVE MARKETS-EM debt holds analysts' allegiance as clarity kicks in

	  U.S. equity index futures now slightly green 

	  Euro STOXX 600 index up ~0.3% 

	  Dollar, crude, bitcoin rise modestly; gold edges red 

	  U.S. 10-Year Treasury yield edges down to ~3.77% 

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EM DEBT HOLDS ANALYSTS' ALLEGIANCE AS CLARITY KICKS IN (0915 EDT/1315 GMT)

As declining uncertainties have painted a somewhat brighter picture for emerging markets (EM), Generali Investments maintained an "overweight" rating for EM external debt under their global allocation.

Receding inflation and resilient economic growth may very well pave the way for emerging markets to unleash their first round of interest rate cuts in the third or fourth quarter, a view echoed by analysts across EM.

Generali Investments' Senior Emerging Market Strategist, Guillaume Tresca, noted three themes in the EM versus developed markets debate.

First, EM central banks will most likely start cutting before the U.S. Federal Reserve, but the cycle may not be a synchronized one.

Second, although both DM and EM have shown resilient growth, a later-than-expected shallow slowdown could be knocking.

Third, Tresca maintained a negative view on the U.S. dollar. The disappointments around China's fading reopening boost and diminishing hopes of a large fiscal stimulus are partially offset by the upside risks to U.S. growth.

This balance of risks could lead to wider external debt spreads by year end, but less than before, the strategist added.

Meanwhile, the spread widening will be more than offset by a high carry and significant positive duration effect resulting from declining UST rates.

Despite tight valuations, Tresca maintained preference for EM investment grades (IG) bonds over high yields (HY) ones. Preference also remained with EM local debt over external debt.

However, Tresca warned there was a risk of EM central banks postponing their easing cycle given sticky inflation.

UBS Global Wealth Management's Chief Investment Officer Mark Haefele's global strategy also seeks to take risk chiefly through high grade, investment grade, and emerging market debt.

(Ankika Biswas)

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	DOW INDUSTRIALS: ON A BREAKOUT RUN (0900 EDT/1300 GMT) 

On Tuesday, the Dow Jones Industrial Average .DJI posted its highest close since April 20, 2022. With this, it also rose for a seventh-straight day, while resolving what appears to be an inverse head & shoulders acting as a continuation pattern.

However, given its streak, the blue-chip average may be stretched to the upside just as it faces its next hurdle in the form of the maximum Fibonacci retracement zone of its 2022 decline:

Indeed, the DJI has now risen seven days in a row. It last posted a seven-day win streak in March 2021. The DJI last gained for eight-straight days from July 31, 2020 to August 11, 2020.

At its 34,986.36 high on Tuesday, the DJI nearly tagged the 76.4%-78.6% Fibonacci retracement zone of its January 2022-October 2022 decline in the 34,995.91-35,178.22 area. The Dow then ended at 34,951.53.

Like the S&P 500 index .SPX , the DJI is flirting with its maximum Fibonacci retracement zone of its 2022 slide just as, on a weekly basis, it hits the 100% time retracement of that decline as well.

Additional DJI resistance resides at a number of reaction highs established from January to April of last year that run from 35,372 to 36,514. The Dow's record intraday high on January 5, 2022 was at 36,952.65.

However, the pattern projection on the inverse head & shoulders calls for eventual new highs in the 37,700 area.

Since the streak suggests that the DJI may be overheated shorter-term, traders will be watching to see if the retracement zone now stops the current run in its tracks.

Bulls will want to see support in the 34,712-34,565 area, which includes the broken neckline, contain weakness. In that event, the Dow can then attempt to resume its breakout run.

(Terence Gabriel)

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 (Terence Gabriel is a Reuters market analyst. The views 

expressed are his own)