FICC Focus EM Lens: From Risk to Resilience With Andersen’s Natalucci
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Oct 7, 2025 Fabio Natalucci, CEO of the Andersen Institute for Finance & Economics and former IMF official, shares his insights on global financial stability and emerging markets. He discusses the challenges of a multipolar world, the shifting dynamics of the dollar, and alternative stores of value like gold and Bitcoin amid concerns over currency debasement. Natalucci highlights the attractiveness of emerging markets due to credible policies and real rates, while also addressing AI investment's impact on economic growth and the risks associated with frontier sovereign debt.
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Dollar Debasement Talk Has Multiple Drivers
- Concerns about US fiscal sustainability, rule-of-law erosion, and threats to Fed independence fuel talk of dollar debasement.
- Alternatives like gold attract attention as central-bank balance-sheet support wanes and QT reversals expose price-sensitive marginal buyers.
Reassess Treasury Hedging Assumptions
- Expect the hedging role of long-duration treasuries to break when inflation and rates rise together.
- Re-evaluate portfolio hedges because high inflation can flip correlations and render traditional safe havens ineffective.
Fast-Rising Term Premia Are The Bigger Risk
- Term premia have risen rapidly, driven by fiscal outlook deterioration rather than high absolute levels.
- The alarming factor is the speed of increase and unclear bipartisan plans to restore US fiscal sustainability.