What Has Changed in EM

  • Philippine President Duterte named Budget Secretary Benjamin Diokno as the new central bank Governor
  • US-Turkey relations are souring
  • National Energy Regulator of South Africa allowed state-owned power company Eskom to raise by prices by 9.4% starting April 1
  • Argentina central bank tightened monetary policy by the most since last fall
  • S&P cut its outlook for Mexico’s BBB+ rating from stable to negative Continue reading “What Has Changed in EM”

Dollar Consolidates Yesterday’s Gains Ahead of US Jobs Data

  • Draghi delivered more than we expected at this meeting, markets were clearly disappointed overall
  • The US February jobs data could be an important catalyst for an even higher US dollar
  • Canada reports February jobs data too; Germany reported weak January factory orders
  • China February trade data came in much worse than expected
  • The EU reportedly made a new Brexit offer to the UK
  • EM FX has sold off sharply after the ECB decision and this trend should continue
  • Taiwan February trade data confirmed the mainland reading

Continue reading “Dollar Consolidates Yesterday’s Gains Ahead of US Jobs Data”

EM Equity Allocation Model For Q2 2019

  • EM remains vulnerable due to the deteriorating global growth outlook
  • We see an eventual test of that January low near 921
  • Looking further out, charts point to a test of the December 2016 low near 945.50
  • Our 1-rated grouping (outperformers) for Q2 2019 now consists of Hungary, Poland, China, UAE, and Korea
  • Our 5-rated grouping (underperformers) for Q2 2019 now consists of Brazil, Turkey, Argentina, Egypt, and South Africa
  • Since our last model update on October 25, our proprietary EM equity portfolio has risen 9.5%, slightly underperforming MSCI EM (+9.9)

Continue reading “EM Equity Allocation Model For Q2 2019”

Dollar Mixed as Markets Mark Time Ahead of ECB

  • Global markets are relatively calm and marking time
  • ECB decision will be the highlight today
  • The Fed delivered a somewhat cautious Beige Book yesterday
  • During the North American session, Fed Governor Brainard speaks 
  • The Loonie remains vulnerable after the BOC delivered the dovish hold yesterday; Australia data was mixed
  • Mexico February CPI is expected to rise 3.94% y/y; Peru central bank is expected to keep rates steady at 2.75%

Continue reading “Dollar Mixed as Markets Mark Time Ahead of ECB”

From the Securities Lending Trading Desk – Week of March 4th

In the Americas, demand for Mattel, Inc.(MAT) remains stable as the toy maker looks to recover from a difficult 2018. In Asia Pacific, Standard Chartered Plc also announced that it will restructure operations into hubs focused in Hong Kong, Singapore and London. In Europe, Aston Martin is back in the spotlight after falling the most since its controversial initial public offering last year.

Continue reading “From the Securities Lending Trading Desk – Week of March 4th”

EM Sovereign Rating Model For Q2 2019

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

Dollar Rally Continues Ahead of ADP Report

  • ADP releases its estimate of private sector jobs and +190k is expected
  • The Fed releases its Beige Book report for the upcoming March 20 FOMC meeting
  • Bank of Canada is widely expected to keep rates steady at 1.75%
  • Brexit talks have reportedly broken down (again)
  • The OECD cut its global growth forecast (again)
  • Turkey central bank kept rates steady at 24.0%, as expected; National Bank of Poland is expected to keep rates steady at 1.5%

Continue reading “Dollar Rally Continues Ahead of ADP Report”

Dollar Rally Continues as Markets Await Fresh Drivers

  • The dollar rally remains on track even as markets calm after yesterday’s volatile session
  • Final February services and composite PMI readings for the eurozone were reported
  • UK reported the last of the February PMI readings
  • China lowered its growth target for this year at the annual National People’s Conference
  • Japan reported February services and composite PMIs
  • Reserve Bank of Australia kept rates steady, as expected; same for Bank Negara
  • Philippines CPI rose 3.8% y/y vs. 4.0% expected as a new central bank governor was chosen

Continue reading “Dollar Rally Continues as Markets Await Fresh Drivers”

On a positive note: Securities Lending 2019

Last year, was a turbulent year for global markets and from a securities lending perspective, it offered numerous opportunities to generate returns in what became a banner year for many lending programs. This year, we expect many of the core themes of last year will continue leading to another broadly positive year for securities lending returns.

Continue reading “On a positive note: Securities Lending 2019”