"Not only is there not much room for error, we think things have already gotten ahead of themselves," the analysts concluded. "Our estimates of trading fair value for [emerging market] spreads, which are based on a fundamental balance sheet score for EM economies, a combination of energy and metal prices and a global risk premium index, suggests that the market is trading about 60 basis points tighter than it should be"--or the highest degree of overvaluation in the last five years.
This article was provided by Bloomberg News.