ECB Preview

Christine Lagarde will chair her first ECB meeting Thursday after taking over as ECB President on November 1. She faces growing skepticism within the ECB regarding the need for further monetary stimulus as well as the efficacy of negative rates. Markets have priced out any further ECB rate cuts, which we believe is premature. Simply put, we would not underestimate Lagarde’s capacity to pursue further easing in 2020 if needed. Continue reading “ECB Preview”

Drivers for the Week Ahead

  • The dollar finally got some traction Friday after the blockbuster US jobs report
  • Trade talks appear to be progressing but the December 15 deadline is looming large; geopolitical risks are running high
  • FOMC meeting Wednesday is the highlight of the week ; US also reports CPI, PPI, and retail sales
  • ECB meeting Thursday will be the first under Madame Lagarde; UK general elections will be held Thursday; SNB also meets
  • Japan reports a fair amount of data this week Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM has had a good month so far as market optimism on a Phase One trade deal remains high. Yet November trade data due out this week should show that until that deal is finalized, the outlook for EM remains weak.  Deadline for the next round of US tariffs is December 15 and so talks this week are crucial.  Lastly, three major EM central banks are expected to cut rates this week, underscoring the downside risks to growth. Continue reading “EM Preview for the Week Ahead”

Drivers for the Week Ahead

  • The dollar had a stellar November after a shaky October, and gains should continue in December
  • This is a big data week for the US; the highlight will be November jobs data Friday
  • BOC meets Wednesday and is expected to keep rates steady at 1.75%
  • Germany is struggling with greater political uncertainty; UK polls suggest a tightening race ahead of the December 12 elections
  • Press reports suggest Japan is planning on a supplemental budget worth at least JPY12 trln ($110 bln); RBA meets Tuesday and is expected to keep rates steady at 0.75% Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

Over the weekend, China reported stronger than expected November PMI readings while Korea reported weaker than expected November trade data.  While the China data is welcome, we put more weight on Korea trade numbers, which typically serve as a good bellwether for the entire region.  Press reports suggest the Phase One trade deal has stalled due to Hong Kong legislation passed by the US Congress.  Until a deal is wrapped up, we remain cautious on EM.  Continue reading “EM Preview for the Week Ahead”

Drivers for the Week Ahead

  • The dollar was surprisingly resilient last week; we look for further dollar gains ahead
  • It is a holiday shortened week in the US, but there are still some major data releases
  • There is a fair amount of eurozone data this week; UK Prime Minister Johnson unveiled his Tory manifesto
  • Hong Kong held local elections this weekend; tensions between Japan and Korea appear to have eased, but questions remain Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM came under pressure last week as doubts rose whether the Phase One deal can be completed.  Also, the dollar was able to get some traction against the majors as the eurozone, UK, and Japan all reported weaker than expected November PMI readings.  Divergences in the growth outlook and interest rate differentials should remain in the dollar’s favor.  Furthermore, the weaker global growth outlook won’t be good for EM. Continue reading “EM Preview for the Week Ahead”

DM Sovereign Rating Model For Q4 2019

We have produced this ratings model to assist investors in assessing relative sovereign risk over a wide range of Developed Markets (DM), 33 in all. We have decided to adhere to MSCI methodology and have moved Hong Kong, Israel, and Singapore from EM to DM. Continue reading “DM Sovereign Rating Model For Q4 2019”