EM Preview for the Week Ahead

EM and most risk assets came under pressure last week as rising virus numbers and weak economic data outweighed the favorable liquidity backdrop. This week brings preliminary PMI readings for much of the world, with further improvement from May expected. Some countries and states will continue to ease lockdowns this week, while Beijing struggles to contain an outbreak. The liquidity backdrop remains support for risk assets, but the tug of war between improved economic data and worsening virus numbers is likely to continue for the time being. Continue reading “EM Preview for the Week Ahead”

EM Preview for the Week Ahead

EM and other risk assets stabilized to end the week after Thursday’s selloff, but remain vulnerable. The risks ahead are the same as before, which include a second wave of infections as well as a longer and shallower than expected recovery in global growth. The Fed’s message of low rates as far as the eye can see was balanced by Powell’s grim outlook for unemployment. The liquidity story should remain positive for EM, with the BOE expected to increase its QE this week, but that may not be enough to sustain continued gains in risk assets. Continue reading “EM Preview for the Week Ahead”

This Is What It Sounds Like When Doves Cry

As we expected, the Fed was about as dovish as it could be without delivering any new policy initiatives. The clear signal is that policy will remain accommodative as far as the eye can see, and that’s negative for the dollar.

Continue reading “This Is What It Sounds Like When Doves Cry”

Dollar Firmer as UST Yields Turn Supportive

Our Latest Thoughts on the Dollar

The dollar remains under pressure, due in large part to the Fed’s aggressive efforts to inject stimulus. We see dollar weakness persisting near-term. From a longer-term perspective, we note that the greenback remains largely rangebound and is unlikely to fall below its 2018 lows. Continue reading “Our Latest Thoughts on the Dollar”

EM Preview for the Week Ahead

Risk-on was the theme last week and that is likely to continue this week. That’s good news for EM, which has benefited from improved market sentiment. Commodity prices continue to recover, even though the data out of mainland China remain mixed. The Fed is expected to reaffirm its current policy stance when the FOMC meets this week. Continue reading “EM Preview for the Week Ahead”