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”
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”
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”
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”
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”
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”