Brazil COPOM Preview

Brazil COPOM meets Wednesday amidst a worsening domestic and global backdrop. Markets are screaming for rate cuts, but it seems too early now as the pension reform outlook remains uncertain. Continue reading “Brazil COPOM Preview”

Drivers for the Week Ahead

  • The FOMC begins a two-day meeting Tuesday with decision to be delivered Wednesday
  • The US retail sales data are a game changer
  • Bank of England meets Thursday; the Tory leadership race continues this week
  • Bank of Japan meets Thursday; eurozone June flash PMIs will be reported Friday
  • Norges Bank meets Thursday and is expected to hike rates 25 bp to 1.25%
  • Several EM central banks meet this week; Korea reports trade data for the first 20 days of June Friday Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

All eyes are on the Fed and we suspect it will stay true to its message of steady rates until the economic outlook worsens enough to warrant easing. In other words, the Fed is unlikely to be as dovish as the market hopes and so the dollar should benefit. Elsewhere, US-China trade tensions remain high and show no signs of letting up. The backdrop remains EM-negative. Continue reading “EM Preview for the Week Ahead”

What Has Changed in EM

  • China eased restrictions on how local governments can spend money
  • Trump threatened sanctions over the Nord Stream 2 project
  • Russia central bank started an easing cycle
  • Turkish central bank delivered a dovish hold
  • Argentina President Macri picked Peronist Senator Pichetto as his running mate
  • US tariffs on Mexico were called off Continue reading “What Has Changed in EM”

Trump Threatens Nord Stream Sanctions Ahead of Russian Central Bank Meeting

President Trump has threatened sanctions over the Nord Stream 2 project. Further details are awaited ahead of the Russian central bank decision tomorrow, where it is expected to start the easing cycle. Continue reading “Trump Threatens Nord Stream Sanctions Ahead of Russian Central Bank Meeting”

HKD Gains Despite Growing Unrest

Despite rising social unrest, the Hong Kong dollar traded today at its strongest level since December 18. While we see no threat to the peg, ongoing weakness in EM is likely to prevent HKD from strengthening too much more. Continue reading “HKD Gains Despite Growing Unrest”

Some Thoughts on Mexico

The US has suspended the tariff threat on Mexico after reaching a deal. Yet the agreement has no specific targets and leaves open the possibility of other punitive measures by the US. Mexican assets thus remain vulnerable to ongoing political risk. Continue reading “Some Thoughts on Mexico”

Drivers for the Week Ahead

  • US has a heavy slate of first tier economic data this week; this could be a key week for the dollar
  • With the media embargo in effect ahead of the June 19 FOMC, there are no Fed speakers this week
  • UK has a heavy data week; Australia reports May jobs data Thursday
  • China data dump for May is this week
  • In EM, the central banks of Russia, Turkey, and Peru meet Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM FX has gotten some traction lately, but we do not think it will last. While the US-Mexico trade tensions appear to have been addressed, the US-China situation seems likely to drag on into Q3. EM seems to be benefitting from the weak dollar, but the global backdrop remains concerning. Continue reading “EM Preview for the Week Ahead”