Drivers for the Week Ahead

  • The dollar continues to get traction
  • FOMC minutes will be released Wednesday; there will be many Fed speakers this week; we get some more US economic data for May
  • Sterling will hit the trifecta again this week, in the form of Brexit risks, weak data, and dovish BOE; eurozone preliminary May PMI readings will be reported Thursday
  • Japan has a heavy data week; RBA minutes will be released Tuesday Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM had another rough week, as weak data and warnings from the Fed and top investment professional hurt market sentiment.  Virtually every currency losing ground against the dollar, and the only exceptions were TRY, THB, and IDR.  Risk sentiment is likely to remain on the ropes this week, as investors will have to wait several weeks to gauge how reopening economies fare around the world. Continue reading “EM Preview for the Week Ahead”

Globe with black background

FX Quarterly Outlook for Second Quarter 2020

In the latest FX Quarterly, our strategists recount the flurry of global policy responses around the world to the ongoing COVID-19 crisis. We also provide our outlook on developed and emerging markets in Q2 2020. Continue reading “FX Quarterly Outlook for Second Quarter 2020”

Dollar Mixed Ahead of US Retail Sales Data

  • It has been a bumpy week for global equity markets; the dollar continues to get traction
  • House Democrats will go ahead with a vote today on a new stimulus package worth $3 trln; US data highlight will be April retail sales
  • Brazil is intervening more aggressively; Mexico cut rates 50 bp, as expected
  • The EU has threatened a lawsuit against the UK over free movement; Germany’s preliminary Q1 growth figures came in close to the dire market forecasts
  • EUR/CHF is trading at the lowest levels since July 2015; China reported April IP and retail sales Continue reading “Dollar Mixed Ahead of US Retail Sales Data”

Dollar Firm as Risk-off Sentiment Intensifies

  • Risk-off sentiment has intensified; as a result, the dollar is getting some more traction
  • Fed Chair Powell pushed back against the notion of negative rates in the US; US Treasury completed its quarterly refunding
  • Weekly jobless claims are expected at 2.5 mln vs. 3.169 mln last week; Mexico is expected to cut rates 50 bp to 5.5%
    There have been growing discussions about negative rates in the UK; weak UK data, rising Brexit risks, and a more dovish BOE have taken a toll on sterling
  • ECB Vice President de Guindos said the region’s economy has “hit the bottom”; the EC is getting ready to roll out a new economic plan to help the most affected countries
  • Japan machine tool orders plunged -48.3% y/y in April; Australia reported weak April jobs data Continue reading “Dollar Firm as Risk-off Sentiment Intensifies”

Turkey’s Desperate Moves Unlikely to Buoy the Lira (Updated)

Turkish policymakers continue to stumble.  The ban of three foreign banks from trading lira was quickly reversed, adding to the sense of disarray.  Indeed, this feels like a rerun of the last lira crisis back in August 2018.  Surprisingly little has changed fundamentally in the nearly two years that have passed, as officials have largely refrained from taking any significant actions except those that make it even harder to invest in Turkey.  Turkey used to be the darlings of EM.  Now, we fear it will end up being like Argentina, where it will take a generation for foreign investors to return. Continue reading “Turkey’s Desperate Moves Unlikely to Buoy the Lira (Updated)”

Dollar Mixed as Markets Await Fresh Drivers

  • The virus news stream is mixed; the dollar continues to consolidate; US-China tensions continue to rise
  • US Treasury wraps up its quarterly refunding; April budget statement is a harbinger of things to come; the next round of stimulus will be contentious
  • We got some dovish BOE comments yesterday; UK continues to play Brexit hardball; UK data was slightly better than expected but awful nonetheless
  • Japan reported March current account data; RBNZ expanded its QE program and opened the door for negative rates; Malaysia’s Q1 GDP surprised on the upside Continue reading “Dollar Mixed as Markets Await Fresh Drivers”

Different Type of Crisis, Some Old Concerns

Over the past two months we have witnessed historic turmoil followed by unprecedented intervention by policy makers and central banks in supporting the capital markets (and more). In many ways the 2020 COVID-19 pandemic is very different from the 2008 global financial crisis, but for some, certain old concerns still linger. In the face of short selling bans and worries about market liquidity, we discuss below how best to navigate some of the common objections and concerns related to securities lending and how to position your securities lending program in the current environment and beyond.

Continue reading “Different Type of Crisis, Some Old Concerns”