It’s a measure of how the climate has changed so quickly for emerging markets that this week’s interest-rate decision in Turkey, an event that would have had traders on tenterhooks six months ago, is being anticipated with a virtual shrug.

Far from encapsulating the vulnerability of the developing economies as it did last year, the lira’s torrid start to 2019 -- it has lost 4.2 percent already this year -- is doing little to take the sheen off the growing sense of recovery seeping through emerging markets.

True, the next development in the trade talks or a flurry of negative economic indicators from China could change everything, as Monday’s declines clearly illustrate. But for now the Federal Reserve’s more dovish tone -- and central bank largess in general -- combined with falling volatility, relatively low valuations and rising commodity prices are keeping most investors positive.

Monday’s price action aside, emerging-market spreads have been narrowing, while stocks and currencies have been celebrating their biggest weekly rally since early November. And a Bloomberg foreign-exchange index that measures carry-trade returns from eight emerging markets, funded by short positions in the dollar, just climbed for a fourth week, its longest winning streak in almost a year.

“The U.S. dollar has now peaked, Fed policy has turned and China is responding to slower growth momentum with monetary and fiscal stimulus,” said Paul Greer, a London-based money manager at Fidelity International, who is overweight developing-nation credit, currencies and local bonds. “All of these factors, coupled with cheap valuations and a recovering oil price, should be supportive for EM risk-asset performance.”

By the way, with Turkey’s economy sliding toward a recession, most economists expect the central bank to keep interest rates on hold Wednesday. The South African Reserve Bank and Bank Indonesia will likely do the same the following day.

Trade Blow

• December trade figures from China on Monday showed an unexpected fall in both exports and imports showing that the effects of the trade war and the economic slowdown are becoming clear
  • Exports in dollar terms fell 4.4 percent from a year earlier, while imports dropped 7.6 percent. Both were the worst result since 2016
  • Negotiators from China and the U.S. expressed optimism after mid-level talks wrapped in Beijing last week, bringing some temporary relief to global investors. Chinese Vice Premier Liu He is scheduled to visit the U.S. for the next round of talks in late January
• Goldman Sachs Group Inc. raised its forecast for the yuan as it factored in a weaker dollar and possible pickup in Chinese activity
  • “While talks can still falter and a deal that rolls back existing tariffs and removes trade uncertainty feels like a high bar, the risk of another escalation in tariffs looks to have declined along with U.S. stock prices,” strategists including New York-based Zach Pandl wrote in a report
• The yuan was little changed on Monday after posting its largest weekly gain since 2005 last week

Brazil’s Pension Overhaul

• Investors will probably get more details this week about Brazil’s overhaul of its pension system as Economy Minister Paulo Guedes readies a final proposal to President Jair Bolsonaro
• Expectations that Brazil’s leader will move quickly to fulfill one of his main campaign promises, a big step toward improving the nation’s fiscal accounts, helped lift the benchmark stock index to a record this year and also buoyed the currency
• Bolsonaro is likely to sign off on the Guedes draft before heading to Davos later this month, setting it up for a congressional vote in February