EM Preview for the Week Ahead

Market sentiment on EM remains positive after the Phase One trade deal was signed.  Data out of China is also supportive for EM.  Key forward-looking data this week are Taiwan export orders and Korea trade data for the first 20 days of January.  The global liquidity story also remains beneficial for risk, with the ECB, Norges Bank, BOC, and BOJ all set to maintain steady rates this week. Continue reading “EM Preview for the Week Ahead”

Some Thoughts on the Latest Treasury FX Report

The US Treasury’s latest “Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States” report no longer considers China a currency manipulator. The underlying message is that the Trump administration will continue to use an ad hoc “carrot and stick” approach to improve US access to the domestic markets of its major trading partners. This suggests there will still be many minor trade skirmishes this year. Continue reading “Some Thoughts on the Latest Treasury FX Report”

EM Preview for the Week Ahead

EM has been able to get some traction as markets basically shrugged off the risk-off sentiment after the Iran attacks.  This week’s planned signing of the Phase One trade deal should help boost EM further, but we remain cautious.  The Iran situation is by no means solved, and we see periodic bouts of risk-off sentiment coming from smaller skirmishes.  The World Bank also sounded a warning bell last week with its downward revisions to its global growth forecasts. Continue reading “EM Preview for the Week Ahead”

Outcomes and Opportunities from the Iran Conflict

In this piece we try to answer some of the lingering questions following the events in Iran and explore resulting opportunities. Continue reading “Outcomes and Opportunities from the Iran Conflict”

EM Preview for the Week Ahead

While the global economic backdrop remains favorable for EM, rising geopolitical risks will be a growing headwind.  The EM VIX surged above 18% Friday as Iran tensions escalated, the highest since early December.  With these tensions likely to persist, EM may remain under some pressure for the time being.  High oil prices are positive for the exporters in Latin America and the Middle East but negative for the importers in Asia and Eastern Europe. Continue reading “EM Preview for the Week Ahead”

EM Preview for the Week Ahead

EM FX was broadly firmer last week, taking advantage of the dollar’s soft tone as well as another wave of risk-on sentiment.  Bullishness on the global economy is quite strong, whilst we are perhaps a bit more skeptical given ongoing weakness in the UK, Japan, and the eurozone.  Dollar bearishness may also be overdone given our more constructive outlook on the US economy, but technical damage has been done that must now be repaired. Continue reading “EM Preview for the Week Ahead”

EM Preview for the Week Ahead

EM FX was mostly firmer last week.  ZAR, PEN, and CLP outperformed while TRY, HUF, and CNY underperformed.  MSCI EM traded at new highs for the cycle but ran out of steam near the 1110 area, while MSCI EM FX lagged a bit and has yet to surpass its July high.  Overall, the backdrop for EM remains constructive but investors must be prepared to differentiate amongst credits in 2020. Continue reading “EM Preview for the Week Ahead”

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”

EM Preview for the Week Ahead

Risk assets such as EM got a big boost last week, as tail risks from a hard Brexit and the US-China trade war have clearly ebbed.  Still, the initial lack of details on the Phase One deal as well as uncertainty regarding the next phases have left the markets a bit jittery and nervous.  Hopefully, this week may bring some further clarity and the good news is that the December 15 tariffs have been canceled.  Continue reading “EM Preview for the Week Ahead”