In the latest FX Quarterly, our strategists provide their views on major events across developed and emerging markets in Q4 2018. Read more. Continue reading FX Quarterly Outlook for Fourth Quarter 2018
In the US, we are seeing investors sell off SONO amid growing concerns about the massive headwinds from competition from not only Amazon but also Apple and Google. In Asia, shares in KYB Corp fell in Tokyo trading after the hydraulic equipment manufacturer admitted falsifying quality control data for earthquake shock absorbers. Finally, in Europe, the plot thickened for Patisserie Valerie (CAKE LN) as news of previously unknown overdrafts surfaced and reports were released that the business could face a parliamentary investigation.
Markets are left wondering if an equity market correction will stay the Fed’s hand in December. The short answer is no. The long answer is that short of a plunge along the lines of 1987 or 2008, Fed policy should not be impacted. This piece attempts to put some historical context behind our call.
- Global equity markets remain under pressure today after US equity markets were unable yesterday to sustain early gains
- Italian officials took a softer line on the budget
- UK CBI reported October industrial trends
- Japan reported mixed September supermarket and department store sales
- The Turkish lira slumped today on domestic political developments
- Bank Indonesia kept rates steady at 5.75%, as expected; Brazil mid-October IPCA is expected to rise 4.6% y/y
New Finance Minister Tito Mboweni will present his mid-term budget review this Wednesday. We think he will do just enough for the agencies to give him the benefit of the doubt until his next budget statement in early 2019. Longer-term, we see more downgrades and loss of investment grade from Moody’s.
- China policymakers rolled out more measures to support the economy and equity market
- Fed releases its Beige Book Wednesday for the upcoming FOMC meeting on November 8
- The Italian budget drama continues; Italy will be rated by S&P Friday
- Eurozone flash PMI readings will come out Wednesday; ECB meets Thursday
- Bank of Canada meets Wednesday and is expected to hike rates 25 bp to 1.75%; Norges Bank and Riksbank are expected to stand pat
- Central banks of Indonesia, Turkey, Russia, and Colombia also expected to stand pat
Investor confidence remains on shaky ground as we close out the year.
- The US Treasury decided not to label China (or any other country) a currency manipulator
- China’s top finance officials worked to calm markets
- Malaysia cut its growth forecast and scrapped plans to balance the budget by 2020
- The IMF and Ukraine have reached a staff-level agreement on a new 14-month stand-by program
- Chile central bank started the tightening cycle with a 25 bp hike
- US-Mexico relations are tense due to reports of a refugee caravan heading north to the US Continue reading “What Has Changed in EM”
- Risk-off sentiment was pushed back a bit during the Asian session after China’s top finance officials worked to calm markets
- China reported Q3 GDP and September retail sales and IP overnight
- The European Commission said Italy’s draft budget was excessive and requested further explanation; Italian yields are still rising
- Japan reported September national CPI
- Canada reports September CPI and August retail sales
- Chile central bank started the tightening cycle with a 25 bp hike last night