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”

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”

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”

Seven Big-Picture Considerations for Covid-19

Below is a non-exhaustive list of medium- and long-term implications from the Coronavirus. We discuss the yuan, China’s competitiveness, its position in the global production chains, the impact on the Phase One trade deal, and rising financial stability risks. Globally, … Continue reading Seven Big-Picture Considerations for Covid-19

EM Preview for the Week Ahead

The still-growing impact of the coronavirus should keep EM and risk sentiment under pressure this week.  The weekend G20 meeting in Saudi Arabia acknowledged the risks to the global economy and said participants agreed on a “menu of policy options.” However, the G20 offered little specific in terms of a coordinated policy response.  Continue reading “EM Preview for the Week Ahead”

EM Preview for the Week Ahead

Concerns about the coronavirus are likely to keep EM under pressure, as the ultimate impact is still unknown.  Global growth was already at risk before the virus hit and now the outlook is even cloudier. Continue reading “EM Preview for the Week Ahead”

EM Preview for the Week Ahead

Risk-off sentiment intensified last week.  Near-term, we think EM is likely to remain under pressure until the full impact of the coronavirus is better known.  On top of this, there is broad-based dollar strength.  Besides the safe haven flows, the US outlook remains very strong.  Taken in conjunction with the recent weak data out of Germany, France, and Japan, it’s clear that the US economy continues to outperform.  Continue reading “EM Preview for the Week Ahead”