Drivers for the Week Ahead

  • The weekend bombing of Saudi oil facilities is the major story
  • The FOMC meeting Wednesday is the main event; Fed Funds futures continue to adjust
  • US rates continue to adjust, as they should; US economy remains in solid shape
  • BOE, BOJ, SNB, and Norges Bank all meet Thursday
  • In EM, the central banks of South Africa, Brazil, Indonesia, and Taiwan meet Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM is likely to come under pressure this week if risk-off sentiment picks up from the Saudi bombings.  The oil producing countries may outperform but we think the global backdrop for EM remains negative, especially as US-China relations remain in flux.  While things are not getting worse, neither are they getting better.  Meanwhile, markets are coming to grips with the fact that the Fed is unlikely to ease as aggressively as has been priced in.  Continue reading “EM Preview for the Week Ahead”

What Has Changed in EM

  • US-China relations appear to be thawing
  • Vietnam cut rates 25 bp to 6.0%
  • Moody’s said that South Africa’s investment grade rating is probably safe for 12-18 months
  • The IMF may delay the next tranche of aid to Argentina until after the October election
  • China doubled the number of Brazilian beef plants that are approved for imports Continue reading “What Has Changed in EM”
Dollar Struggles; More Losses Likely Before Better Demand is Found

Dollar Soft as Risk Sentiment Stoked Ahead of US Retail Sales

Dollar Soft Ahead of ECB Decision

  • Risk sentiment was helped by a slight thaw in US-China trade tensions
  • The ECB decision is the main event today; the eurozone reported weak July IP
  • The US data highlight today is August CPI; higher US yields are helping the dollar
  • Oil prices remain heavy
  • Malaysia kept rates steady at 3.0%; Turkey is expected to cut rates 275 bp to 17.0%; Peru is expected to keep rates steady at 2.5% Continue reading “Dollar Soft Ahead of ECB Decision”

ECB Preview

The ECB meets Thursday and is widely expected to deliver a package of easing measures.  Here, we preview some of the possible actions as well as implications for the euro and other risk assets. Continue reading “ECB Preview”

Dollar Firm as US Yields Rise Ahead of PPI

  • The dollar continues to gain traction
  • The selloff in global bond markets continues; US reports August PPI
  • Press reports China will introduce measures to ease the negative impact of the trade war
  • China announced exemptions to tariffs for some US goods; China reported strong loan growth in August
  • Scottish appeals court ruled that Johnson’s suspension of Parliament was unlawful
  • Brazil July retail sales are expected to rise 2.2% y/y; Poland is expected to keep rates steady at 1.5% Continue reading “Dollar Firm as US Yields Rise Ahead of PPI”

Turkey Monetary Policy Planting Seeds of Future Crisis

Turkey central bank meets September 12 and is expected to cut rates 275 bp.  With Erdogan talking about single digit rates and inflation, it’s clear that rates are headed significantly lower.  At some point soon, we think the risk/reward for investing in Turkey will send investors fleeing for the exits. Continue reading “Turkey Monetary Policy Planting Seeds of Future Crisis”

Dollar Firms on Turnaround Tuesday

  • The dollar has gained some limited traction as the risk on euphoria is showing signs of letting up
  • China’s SAFE scrapped foreign investment limits in local stock and bond markets; China reported August CPI and PPI.
  • The UK bill forcing an extension to prevent a hard Brexit became law; UK reported firm July labor market data
  • The Scandies both reported lower than expected August CPI
  • South Africa July manufacturing production is expected to contract -1.5% y/y Continue reading “Dollar Firms on Turnaround Tuesday”