(Bloomberg) -- The largest US-listed exchange traded fund tracking developing-world equities rebounded from a session low after minutes from the Federal Reserve revealed policymakers saw the risk of cutting interest rates too quickly, signaling long-awaited monetary easing could come later than investors are pricing in. 

The $74.6 billion Vanguard FTSE Emerging Markets ETF traded up to $41.21 at the New York close after slumping 0.2% following the release. The MSCI Emerging Markets index it tracks held onto gains of about 0.2% after climbing as much as 0.7% earlier. Investors’ souring risk appetite briefly took the currency gauge lower too, though it edged higher by the end of the trading day. 

Fed officials remain attentive to the trajectory of inflation, with some worried that progress toward the central bank’s 2% target could stall, the minutes showed. Emerging-market assets had already slid earlier in the day after lackluster demand for a 20-year Treasury auction sent US long-term yields to new highs for the year. 

While changing bets on US rates continue to cause short-term jitters in emerging market assets, impact from the minutes “should be pretty limited,” said Brendan McKenna, a strategist at Wells Fargo in New York. 

That could allow risky assets to continue to rebound as a rush to buy shares linked to AI demand and confidence in India’s growth prospects offset lingering concerns around US monetary policy. Initiatives by Chinese officials, including a cut to banks’ reserve ratios and a reduction in loan prime rates, have helped stabilize sentiment. Benchmark indexes of Chinese stocks are rising this month, but have yet to erase their 2024 losses.

“The January selloff pushed valuations in emerging markets to attractive levels, enticing bargain hunters,” said Manish Bhargava, a fund manager at Straits Investment Holdings in Singapore. 

In South Africa, local-bond yields fell as the nation tapped its gold and foreign-exchange reserves to reduce the scale of public debt sales. The rand, which touched a session high after the announcement, slid. The Israeli shekel rebounded during US trading hours, strengthening for the first day in three after data showing a larger-than-expected economic contraction in the final three months of last year drove a selloff.

Read: South African Rand Jumps as Nation Taps Reserves for Debt

Bonds issued by state-owned Petroleos de Venezuela SA due in 2020 collapsed and are now down 17 cents over the past two days, after New York State’s top court ruled Venezuelan authorities will determine whether the debt is valid.

Pakistan’s bonds led gains across emerging-market dollar debt as two main family-controlled parties agreed to form a government. The country’s nine-month bailout program from the International Monetary Fund expires in April.

(Updates with closing prices throughout)

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