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”
INTRODUCTION The FOMC begins a two-day meeting tomorrow with the decision due out Wednesday afternoon. The Fed is widely expected to keep rates steady after three straight cuts. What’s next? RECENT DEVELOPMENTS At the October 30 meeting, the FOMC … Continue reading FOMC Preview (with a tribute to Paul Volcker)
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”
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”
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”
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”