EM Preview for the Week Ahead

Market sentiment is likely to open this week on an upswing after the Fed’s emergency rate cut and expanded QE were announced Sunday afternoon local time.  Yet as we have seen time and again this past couple of weeks, added stimulus has had little lasting impact on markets as the virus numbers continue to worsen.  Europe is now reporting more daily cases than China did at its peak.  We remain negative on EM until the global growth outlook becomes clearer. Continue reading “EM Preview for the Week Ahead”

ECB Preview

Christine Lagarde will chair her third ECB meeting Thursday.  She faces growing risks of recession but also widespread skepticism within the ECB regarding the efficacy of negative rates.  Markets have priced in several rate cuts this year.  Here, we discuss what measures the ECB may take this week. Continue reading “ECB Preview”

Drivers for the Week Ahead

  • Risk-off sentiment continues to build as the coronavirus spreads
  • Fed easing expectations continue to intensify; February inflation readings for the US will be reported this week
  • The ECB meets Thursday and markets are split; the stronger euro is doing the eurozone economy no favors
  • The UK has a heavy data release schedule Wednesday; UK government also releases its budget that day
  • Japan has a fairly heavy data week; the yen continues to benefit from risk-off sentiment Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

Risk-off sentiment continues to build as the coronavirus spreads and so EM is likely to remain under pressure.  Oil prices are down sharply after Saudi Arabia and Russia were unable to agree on output cuts, leading the former to flood the market with low cost oil.  There will be a lot of collateral damage, including EM producers, DM producers, and US shale producers.  Continue reading “EM Preview for the Week Ahead”

Updated Democratic Primary Timeline

Super Tuesday has come and gone. Bloomberg has suspended his campaign after an extremely poor showing, and Warren is expected to follow suit soon. Here is our updated take on the likely Democratic candidate. Continue reading “Updated Democratic Primary Timeline”

Dollar Mixed Ahead of FOMC Decision

Some Thoughts on the Fed’s Surprise Cut

The Fed just surprised markets with a 50 bp intra-meeting cut.  The vote was unanimous, and the Fed said it will continue to act as appropriate.  This would seem to open the door for further cuts, but front-loading easing may also mean that they will ultimately need to do less in this mini-cycle.  In this piece, we discuss what the Fed can do, what it can’t do, what it should do, and what it will likely do. Continue reading “Some Thoughts on the Fed’s Surprise Cut”

Drivers for the Week Ahead

  • The dollar has softened as Fed easing expectations have picked up
  • Late Friday, Chair Powell issued an unscheduled statement saying the Fed is monitoring the virus and will act as appropriate
  • This is a big data week for the US; the Fed releases its Beige Book report Wednesday
  • Super Tuesday comes this week; Bank of Canada meets Wednesday
  • Final eurozone and UK February PMI readings will be reported this week
  • Reserve Bank of Australia meets Tuesday; BOJ Governor Kuroda released an emergency statement Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

The corona virus news stream remains negative and that is likely to keep pressure on EM and other risk assets.  Even the prospects of potential Fed easing are not enough to offset the growing headwinds to the global economy, as China reported much weaker than expected February PMI readings over the weekend.    Continue reading “EM Preview for the Week Ahead”

Some Thoughts on the Coronavirus

Global markets have gotten a reality check as the coronavirus spreads. While most expect this to mirror previous viral outbreaks, the ongoing uncertainty has markets fearing the worst. Here, we try to put this current outbreak into perspective but find that we are facing a unique situation. Until the scope of the outbreak becomes clearer, risk sentiment will remain negative. Continue reading “Some Thoughts on the Coronavirus”