Morning Commentary: Holiday slowdown quiets emerging markets; focus shifts to Nafta talks

By Rebecca Melvin

New York, Dec. 21 – Emerging market credit was quiet early Thursday as personnel thinned out at many financial market firms ahead of year-end holidays.

Market focus was expected to shift from the U.S. tax reform bill, which now awaits president Donald Trump’s signature after passing both chambers of the legislature, to negotiations of the North American Free Trade Agreement.

In the latest talks, Mexico and Canada were holding firm in their resistance to the most contentious changes to Nafta proposed by the United States, but substantive alternative proposals have not yet been forthcoming.

There are 28 areas of negotiation going on covering such things as labor, gender perspectives and corruption.

Canada says that it is waiting for softer U.S. demands, but U.S. legislators had been focused on U.S. tax reform and had not had a chance to alter proposals.

U.S. interest rates and Nafta are among the largest risks to emerging market returns, sources said.

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