From the Securities Lending Trading Desk – Week of March 18th

In the Americas, we have seen increased demand for Turtle Beach Corp. (HEAR), a video-game headset maker, ahead of their fourth-quarter 2018 financial results. In Asia Pacific, China’s largest electric-vehicle maker is continuing to feel the effects of the central government’s decision earlier in the year to reduce subsidies to the industry. In Europe, Elliot Management Corp and Vivendi set to go to war again over Telecom Italia Spa (TIT IM) board.

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Drivers for the Week Ahead

  • Last week was one of the worst ones for the dollar since early December, but let’s put things in perspective
  • The FOMC meets Wednesday and is the highlight of the week
  • There is a fair amount of US data to be reported this week
  • Eurozone flash PMI readings for March will be reported Friday
  • UK Parliament is scheduled to hold a third vote on Prime Minister May’s Brexit deal; The Bank of England meets Thursday
  • Swiss National Bank and Norges Bank also meet Thursday
  • It’s another busy week for EM central banks

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EM Preview for the Week Ahead

EM FX ended a good week on a strong note, with virtually every currency up against the greenback. The FOMC is likely to send a very dovish message to the markets this week. While this should help EM gain, we note that risk assets generally did not do well after the January FOMC and March ECB meetings. We think that global growth concerns will become more of an issue in the coming days. Continue reading “EM Preview for the Week Ahead”

Sterling Rallies on Likely Brexit Delay

  • Sterling is the big mover after the UK parliament soundly rejected May’s Brexit plan yesterday
  • The UK parliament will vote whether nor not to go for a hard Brexit, which is likely to fail
  • US data have not been helpful for the dollar
  • Japan reported weak core machine orders for January
  • The HKMA defended the HKD peg for a second day; Mexico January IP is expected to contract -2.0% y/y

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From the Securities Lending Trading Desk – Week of March 11th

In the Americas, Eli Lilly and Company (LLY) completes a spin-off of its remaining interest in Elanco Animal Health (ELAN). In Asia Pacific, a new announcement caused shares in Kawasaki Kisen Ltd to slide as much as 10%. In Europe, UK retail is a focus for borrowers again this week as Debenhams returns to the headlines.

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Dollar Soft Ahead of UK Brexit Vote

  • The dollar remains under pressure from weak data and budget uncertainty
  • Next up are the inflation readings
  • May made a last-ditch attempt at a deal; UK parliament votes on her latest Brexit plan
  • Sweden reported lower than expected February CPI
  • The Philippine central bank’s new Governor Diokno affirmed his dovish leanings
  • India reports February CPI and January IP; Brazil reports February IPCA inflation

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Drivers for the Week Ahead

  • The dollar is seeing some profit-taking after the jobs report
  • The US data schedule is jam-packed this week
  • The UK parliament is scheduled to vote on May’s Brexit plan Tuesday
  • Bank of Japan meets Friday and is expected to keep policy on hold
  • Norway and Sweden both report February CPI this week
  • China reports February IP and retail sales Thursday

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EM Preview for the Week Ahead

EM FX came under great pressure last week despite the ECB’s dovish hold. Markets instead focused on the grim eurozone economic outlook, which comes within the context of a broader global slowdown. It’s clear that EM needs more than just the liquidity story, though that may be tested too with the spate of US data releases (retail sales, CPI, and PPI) out this week. We remain negative on EM. Continue reading “EM Preview for the Week Ahead”

What Has Changed in EM

  • Philippine President Duterte named Budget Secretary Benjamin Diokno as the new central bank Governor
  • US-Turkey relations are souring
  • National Energy Regulator of South Africa allowed state-owned power company Eskom to raise by prices by 9.4% starting April 1
  • Argentina central bank tightened monetary policy by the most since last fall
  • S&P cut its outlook for Mexico’s BBB+ rating from stable to negative Continue reading “What Has Changed in EM”