Hard Brexit Redux?

The risks of a hard Brexit are perhaps higher than markets appreciated. Here, we set forth some possible scenarios as to what may unfold after the January 31 deadline. Uncertainty is likely to be protracted and markets hate uncertainty. As such, we see UK assets continuing to underperform. Continue reading “Hard Brexit Redux?”

Drivers for the Week Ahead

  • While the two biggest tail risks for global markets have been addressed, uncertainty will remain in 2020
  • The first December readings for the US manufacturing sector kick off this week; Canada has a major data week
  • BOE meets Thursday and is expected to keep rates steady at 0.75%; ahead of the decision, there is a raft of UK data
  • Norges Bank, Riksbank, and BOJ also meet Thursday Continue reading “Drivers for the Week Ahead”

Three UK Election Takeaways

There were at least three big consequences from the UK elections. (1) The Conservatives won a decisive majority and Brexit is happening by January 31, 2020. (2) Labour is likely to move to the centre after the resounding defeat and the poor showing from the Liberal Democrats. (3) The SNP will interpret their victory in Scotland as a mandated for a second referendum. Below we discuss each one. Continue reading “Three UK Election Takeaways”

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”

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”

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”

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”