South African Reserve Bank Likely to Cut Rates This Week

South African Reserve Bank meets Thursday and is widely expected to start an easing cycle with a 25 bp cut. Meanwhile, President Cyril Ramaphosa must grapple with poor fundamentals and ongoing corruption investigations. Continue reading “South African Reserve Bank Likely to Cut Rates This Week”

Bank of Korea May Cut as Economic Headwinds Build

Bank of Korea meets Thursday and may begin an easing cycle. However, it’s a tough call and markets are pretty much split. Meanwhile, Japan and Korea are in the midst of a diplomatic spat that risks putting further headwinds on the economy. Continue reading “Bank of Korea May Cut as Economic Headwinds Build”

Drivers for the Week Ahead

  • The dollar came under pressure after Powell’s testimony last week
  • The US data highlight this week will be June retail sales Tuesday
  • The UK has a heavy data week
  • Canada reports June CPI Wednesday; RBA minutes will be released Tuesday; New Zealand reports Q2 CPI Tuesday
  • In EM, the central banks of Korea, Chile, Indonesia, and South Africa meet Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM FX was mixed last week despite the dovish signals from the Fed’s Powell. Weak data from emerging Asia support the notion that the ongoing US-China trade war will continue to weigh on global growth and trade, which is negative for EM. We remain cautious on EM, especially given our less dovish take on the Fed. Continue reading “EM Preview for the Week Ahead”

Drivers for the Week Ahead

  • The June jobs data support our view that the US economy remains in solid shape
  • FOMC minutes will be released Wednesday; Fed Chair Powell gives his semiannual Humphrey-Hawkins testimony
  • US data highlights are June CPI Thursday and PPI Friday
  • UK reports May GDP, IP, construction output, and trade Wednesday
  • Bank of Canada meets Wednesday and is expected to keep rates steady at 1.75%
  • EM FX remains vulnerable; the shock firing of central bank Governor Murat Cetinkaya over the weekend may weigh on wider EM Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM FX remains vulnerable to ongoing global trade tensions. It may also suffer from the recalibration of market expectations regarding Fed policy. We remain negative on EM near-term until the outlook for both of these major drivers becomes clearer. Continue reading “EM Preview for the Week Ahead”

Uridashi Issuance in H1 2019

So far this year, foreign currency Uridashi issuance has totaled $2.6 bln. The Q1 total was about $2.5 bln and so issuance basically came to a screeching halt in Q2. Annualized, this amounts to $5.2 bln and would be the lowest since the $2.2 bln issued in 2002. Continue reading “Uridashi Issuance in H1 2019”

Drivers for the Week Ahead

  • The G20 delivered as much good news for risk sentiment as one could want
  • There will be several major US data releases this week; Fed speaking engagements are surprisingly few this week
  • Eurozone final June manufacturing PMI will be reported Monday; BOJ released its Q2 Tankan report
  • RBA meets Tuesday and is expected to cut rates 25 bp to 1.0%; Swedish Riksbank meets Wednesday and is expected to keep rates at -0.25%
  • China reported weak PMI readings for June; Poland is the only EM central bank to meet and is expected to keep rates steady Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM and risk assets should get a near-term boost from the good news coming out of the G20 meeting. Still, we caution against getting too optimistic on EM. Current US tariffs on Chinese goods will remain in place, which will continue to act as a headwind on global growth and trade. Continue reading “EM Preview for the Week Ahead”