What Has Changed in EM

  • Pakistan reached agreement with the IMF for a $6 bln 3-year Extended Fund Facility
  • Philippines central bank cut reserve requirements by two percentage points to 16%
  • The US announced it would cut tariffs on Turkish steel by half to 25%
  • Egypt reached agreement with the IMF to unlock $2 bln of aid in final review of its 3-year Extended Fund Facility
  • Brazil saw nationwide protests against proposed cuts in the education budget Continue reading “What Has Changed in EM”

Dollar Firm as Trade Tensions Rise

  • Rhetoric from both sides is getting more heated, making a US-China deal seem a long way off (if at all)
  • We would downplay headlines claiming the PBOC won’t let the yuan weaken past 7 per dollar
  • Jitters about Italy helped push the euro lower yesterday and that has continued today
  • The US announced it would cut tariffs on Turkish steel by half to 25%
  • Singapore reported weak April trade data; BRL real continues to underperform Continue reading “Dollar Firm as Trade Tensions Rise”

Italian Political Outlook Hinges on European Parliamentary Elections

Italy is back in the spotlight as Deputy Prime Minister Salvini turns up the rhetoric ahead of European Parliamentary elections. His controversial statements reopen old wounds from last fall and suggests similar market turmoil may be in store for the eurozone. Much will depend on the outcome of European Parliamentary elections this month. Continue reading “Italian Political Outlook Hinges on European Parliamentary Elections”

Dollar Mixed as Markets Await Fresh Drivers

  • The Trump administration is fighting a trade war on many fronts
  • Recent developments suggest that China has become the sole focus for the trade hawks
  • We see no letup in the hardline stance being taken against all US trading partners
  • The Atlanta Fed’s GDPNow model is now tracking 1.1% SAAR for Q2, down from 1.6% previously
  • Australia reported April labor market data
  • Bank Indonesia kept rates steady at 6.0%, as expected; Banco de Mexico is expected to keep rates steady at 8.25% Continue reading “Dollar Mixed as Markets Await Fresh Drivers”

Frontier Sovereign Rating Model For Q2 2019

We have produced the following ratings model to assess relative sovereign risk in Frontier Markets. A country’s score directly reflects its creditworthiness and underlying ability to service its external debt obligations.  Continue reading “Frontier Sovereign Rating Model For Q2 2019”

Dollar Firms Even as US Rates Fall and Curve Inverts

  • The dollar is getting traction even as US rates continue to fall
  • The US data highlight is April retail sales
  • Trump’s efforts to influence the Fed continue
  • China reported weak April IP and retail sales
  • Canada reports April CPI
  • Turkish lira remains under pressure; Poland is expected to keep rates steady at 1.5%.
  • Argentina April CPI is expected to rise 56.3% y/y; Brazil COPOM minutes were surprisingly dovish Continue reading “Dollar Firms Even as US Rates Fall and Curve Inverts”

From the Securities Lending Trading Desk – Week of May 13th

In the Americas, lending fees have skyrocketed for coal mining company, Cloud Peak Energy. In Asia Pacific, there’s an increase in demand for Softbank Corp following an announcement that it will become the largest shareholder of Yahoo Japan. In Europe, demand continues for Purplebricks as one of its founding partners exits the company.

Continue reading “From the Securities Lending Trading Desk – Week of May 13th”

Dollar Mixed as Some Calm Returns to Global Markets

  • Global markets have calmed down after yesterday’s bloodbath
  • Yet the tit for tat continues; the big surprise was that China is reportedly discussing the sale of UST holdings
  • The dollar remains firm even though markets are pricing in more than one rate cut this year
  • UK reported mixed labor market data; implied rates on short sterling futures continue to fall
  • Sweden reported April CPI
  • MSCI EM FX has given up over 75% of this year’s rally; Brazil COPOM minutes will be released Continue reading “Dollar Mixed as Some Calm Returns to Global Markets”

Some Thoughts on the Upcoming Semiannual US Treasury FX Report

The US Treasury will soon release its semiannual report to Congress on “Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States.” As well as adjusting the criteria for being named a currency manipulator, more countries will reportedly come under scrutiny. Yet despite the current trade frictions, we do not think China will be named as a manipulator. Continue reading “Some Thoughts on the Upcoming Semiannual US Treasury FX Report”