• Malaysian bonds may be dropped from FTSE Russell’s World Government Bond Index (WGBI) due to liquidity concerns
• Pakistan Finance Minister Asad Umar has resigned from the Cabinet
• Poland continues to overhaul its pension system
• The Bank of Israel said it is considering FX intervention if the shekel continues to appreciate
• Egypt’s parliament overwhelmingly approved a constitutional amendment that would allow President El-Sisi to remain in office through 2030
• Press reports suggest that Turkey’s central bank reserves are much lower than reported
• Argentina central bank President Sandleris said it would hold its currency band at current levels until the end of the year
• Brazil pension reforms look likely to be bogged down in Congress Continue reading “What Has Changed in EM”

• The broad-based dollar rally stalled out in Q1 following the more dovish market take on the Fed
• However, the dollar has been getting some more traction of late as US rates rise
• Developments elsewhere are also dollar-supportive
• We believe markets are vastly overestimating the Fed’s capacity to ease in 2019
• Our 1-rated (strongest fundamentals) grouping for Q2 2019 consists of CNY, TWD, THB, KRW, and RUB
• Our 5-rated (weakest fundamentals) grouping for Q2 2019 consists of ARS, ZAR, TRY, RON, and PKR

Continue reading “EM FX Model For Q2 2019”

Indonesia goes to the polls Wednesday. President Joko Widodo is widely expected to win a second term. Political continuity and solid economic fundamentals should help Indonesian assets outperform this year. Continue reading “Indonesia Outlook Remains Solid After Elections This Week”

• Philippines central bank said it will cut rates soon due to falling inflation
• MAS cut its core inflation forecast for this year to 1-2% from 1.5-2.5% previously
• Turkey’s government announced it will inject fresh capital into state-owned banks
• Now that the election has passed, Turkey’s central bank is normalizing monetary policy
• Benjamin Netanyahu and his Likud party appear to have won the Israeli elections.
• Argentina’s government will reportedly freeze prices on some food items for six months
• President Bolsonaro reportedly ordered Petrobras to cancel a planned increase in diesel fuel prices for “the greater good.”
• Brazil pension reform looks more and more likely to be delayed
• Ecuador expelled fugitive Julian Assange from its London embassy Continue reading “What Has Changed in EM”

The IMF just approved a $10.8 bln tranche of aid to Argentina Friday, yet the peso continues to weaken to record levels. The economic backdrop is worsening even as political risk rises ahead of October elections, and so we believe Argentine assets are likely to continue underperforming this year. Continue reading “Argentine Assets to Underperform as October Elections Approach”