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”

EM Preview for the Week Ahead

EM has had a good month so far as market optimism on a Phase One trade deal remains high. Yet November trade data due out this week should show that until that deal is finalized, the outlook for EM remains weak.  Deadline for the next round of US tariffs is December 15 and so talks this week are crucial.  Lastly, three major EM central banks are expected to cut rates this week, underscoring the downside risks to growth. Continue reading “EM Preview for the Week Ahead”

Latin America Views Update

The news flow out of Latin America has been relentless since the middle of the year. Here we review some of the most recent developments concerning Chile, Brazil and Mexico, and how our trading views around them have evolved. Continue reading “Latin America Views Update”

EM Preview for the Week Ahead

Over the weekend, China reported stronger than expected November PMI readings while Korea reported weaker than expected November trade data.  While the China data is welcome, we put more weight on Korea trade numbers, which typically serve as a good bellwether for the entire region.  Press reports suggest the Phase One trade deal has stalled due to Hong Kong legislation passed by the US Congress.  Until a deal is wrapped up, we remain cautious on EM.  Continue reading “EM Preview for the Week Ahead”