EM enjoyed an extended rally last week, and it should carry over to the early part of the week. The Wednesday FOMC meeting poses a risk to EM, especially if markets continue to price in a more hawkish Fed. The dot plots and press conference will be very important. BOE and the Norges Bank also meet this week, with the latter expected to deliver a 25 bp rate cut to 0.5%. Firm commodity prices are helping sentiment, with WTI making new highs for 2016 and approaching the $40 area. While weaker than expected China data over the weekend could hurt EM sentiment, this may be offset by the strongest yuan fixes this year by the PBOC.

Besides the global backdrop, specific country risk remains important. Brazil continues to ride a wave of impeachment optimism, but we warn that this bullishness is likely overdone. The South African Reserve Bank meets amidst deteriorating fundamentals, while Turkey was able to wring a favorable deal out of the EU regarding the refugee crisis. Elsewhere, Poland came under criticism from the Council of Europe due to the government’s Constitutional Court overhaul.

India reports February WPI and CPI data Monday. The former is expected at -0.2% y/y and the latter at 5.52% y/y. Price pressures are starting to pick up, and should keep the RBI cautious going forward. The next policy meeting is April 5, and no change in rates is expected then.

Czech Republic reports January retail sales Monday, which are expected to rise 6.0% y/y vs. 8.7% in December. It reports January construction and industrial output (1% y/y consensus) Tuesday. The real sector remains robust, but continued deflation risks remain a concern for the central bank. Although the bank has started to discuss negative interest rates, we do not think current conditions warrant such a response yet.

Brazil reports January GDP proxy Monday and is expected at -7.1% y/y vs. -6.5% in December. Brazil then releases the second preview for March IGP-M wholesale inflation Friday. Most inflation measures remain elevated, and yet the central bank has been able to keep rates steady at 14.25% without the long end of the Brazilian curve selling off. IPCA inflation came in lower than expected in February and eased to 10.4% y/y.