What Has Changed in EM

  • India-Pakistan tensions are rising
  • Poland central bank is tilting even more dovish.
  • Israel opposition is uniting against Prime Minister Benjamin Netanyahu
  • Nigeria delayed its elections by one week to this Saturday
  • South Africa Finance Minister Mboweni painted a grim fiscal picture
  • Argentina President Mauricio Macri official announced he will seek re-election for a second term this October
  • Brazil President Jair Bolsonaro personally delivered his pension reform proposal to Congress
  • Banco de Mexico took the unprecedented step of correcting its meeting minutes Continue reading “What Has Changed in EM”

Markets Calm Ahead of the Weekend

  • Markets are treading water, awaiting fresh developments in the main areas of concern
  • There were many Fed speakers this week but today is the big day
  • Canada reports December retail sales
  • Japan reported January national CPI
  • Malaysia reported January CPI; Taiwan reported January export orders; Mexico reports mid-February CPI Continue reading “Markets Calm Ahead of the Weekend”

Brazil Optimism Overdone, Reality Check Overdue

Brazil optimism is taking a hit as markets reassess political risk. President Bolsonaro fired Secretary-General Bebianno over allegations their PSL party misused campaign funds in last fall’s elections. The timing is bad as it comes just as the government submitted its pension reform bill to Congress, where reports suggest growing pushback from lawmakers against the reforms.       Continue reading “Brazil Optimism Overdone, Reality Check Overdue”

Dollar Firm After FOMC Minutes but Aussie Takes the Spotlight

  • The FOMC minutes can be best described as less dovish than anticipated
  • The next piece of the US labor market puzzle comes out today
  • Eurozone flash PMI readings for February were reported; ECB will release the record of its January 24 meeting
  • Reports suggest the Chinese port of Dalian has banned coal imports from Australia; Australia reported January jobs data
  • Korea reported weak trade data for the first 20 days of February
  • Bank Indonesia kept rates steady at 6.0%, as expected; Banco de Mexico releases minutes Continue reading “Dollar Firm After FOMC Minutes but Aussie Takes the Spotlight”

Rand Weakness to Resume After South African Budget

South Africa’s budget statement delivered bad news on all fronts today. We see downgrades ahead, including the loss of investment grade from Moody’s. On the other hand, lower than expected inflation may tempt the SARB into tilting more dovish, which would also be negative for the rand. Continue reading “Rand Weakness to Resume After South African Budget”

Dollar Firms But FOMC Minutes Pose Dovish Risks

  • We suspect the corrective/consolidative trading conditions are not over just yet
  • FOMC minutes will be released, where we see dovish risks
  • Sterling has rallied on Brexit optimism; we think this optimism is overdone
  • The US has reportedly asked China to keep the value of the yuan stable as part of ongoing trade negotiations
  • Japan reported January trade data; Governor Kuroda said today that the BOJ does not target exchange rates
  • South Africa January CPI rose 4.0% y/y; Finance Minister Mboweni makes his FY2019/20 budget statement later today Continue reading “Dollar Firms But FOMC Minutes Pose Dovish Risks”

From the Securities Lending Trading Desk

In the Americas, Frontier is the owner and operator of an extensive copper and fiber optic network but they are up against a massive debt burden. In Asia, shares in the Doosan Group of companies plunged last week after reporting worse than expected earnings. In Europe, the UK contractor, Interserve (IRV LN), has seen two of its largest shareholders refuse to back a deal the board had set out to swap creditor balances for equity in the firm.

Continue reading “From the Securities Lending Trading Desk”

Russia Outlook Solid but Sanctions Risk Looms

Russia was just upgraded by Moody’s to investment grade. While we have been negative on Russia, the upgrade shows just how resilient the economy has been. Yet the recent arrest of Michael Calvey has sent a chill through the investment community. Furthermore, the US Senate is also moving forward with another round of sanctions. Continue reading “Russia Outlook Solid but Sanctions Risk Looms”

Dollar Firm As US Returns From Holiday

  • The dollar rally has resumed as the US returns from holiday
  • The next round of US-China trade talks will begin today in Washington
  • President Trump received the findings of a Commerce Department probe into whether imported vehicles pose a national security threat
  • UK reported December labor market data; UK politics are in flux
  • Sweden reported January CPI; RBA released minutes from this month’s meeting
  • Singapore presented an expansionary budget ahead of elections
  • Turkey central bank is paving the way for eventual rate cuts; Brazil optimism is taking a hit on rising political risk Continue reading “Dollar Firm As US Returns From Holiday”