Drivers for the Week Ahead

  • The dollar rally continues despite President Trump’s complaints over the weekend that it is too strong
  • The US 10-year yield traded at 2.76%, the highest since January 28
  • The February jobs data Friday could be an important catalyst for even higher US yields
  • ECB meeting Thursday will be the highlight of the week in Europe
  • China’s annual National People’s Conference begins in Beijing Tuesday; reports suggest the US and China are nearing a deal on trade
  • Reserve Bank of Australia meets Tuesday; Bank of Canada meets Wednesday
  • It’s another busy week of EM central bank meetings

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EM Preview for the Week Ahead

EM FX ended the week soft as the dollar continued to claw back recent losses on the back of higher US rates. US jobs data this Friday will be very important to keep the trend of rising US rates going. Meanwhile, low inflation in EM should allow central banks to start contemplating rate cuts, though none are expected to cut anytime soon. Continue reading “EM Preview for the Week Ahead”

What Has Changed in EM

  • MSCI will raise the index weight of China A-shares in its EM index
  • Pakistani-India tensions remain high after Pakistan downed two Indian jets in Kashmir
  • The US-North Korea summit in Hanoi ended badly
  • Poland ruling Law and Justice Party announced a big round of fiscal stimulus ahead of the elections
  • Israel Attorney General Mandelblit formally notified Prime Minister Netanyahu that he plans to charge him with bribery, fraud, and breach of trust
  • Nigerian President Buhari was declared the winner of last weekend’s election
  • Argentina central bank will tighten policy
  • Brazil announced the auction date for a group of deep-water oil fields Continue reading “What Has Changed in EM”

Dollar Firm as US Rates Rise

  • The dollar is getting some more traction despite some easing in geopolitical tensions
  • The US 10-year yield at 2.73% is the highest since February 5
  • February ISM manufacturing PMI is due out
  • Eurozone reported final manufacturing PMI readings
  • UK reported manufacturing PMI for February; Canada reports Q4 GDP
  • Japan reported January labor market data and February Tokyo CPI
  • Caixin China manufacturing PMI came in stronger than expected; Korea reported weak February trade data

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Dollar Soft Despite Risk-Off Impulses

  • Markets are surprisingly calm despite some risk-off impulses
  • The US-North Korea summit in Hanoi ended badly
  • With Powell’s Humphrey-Hawkins testimony out of the way, the parade of Fed speakers resumes
  • US Q4 GDP will be reported today; Germany reports preliminary February CPI
  • Official China manufacturing PMI fell to 49.2 in February vs. 49.5 expected
  • Japan reported soft data for January; Bank of Korea kept rates steady at 1.75%, as expected

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Dollar Remains Soft in the Wake of Powell’s Testimony

  • The dollar has sold off against the majors after Powell’s testimony
  • Regional tensions took another leg higher today after Pakistan downed two Indian jets in Kashmir
  • It will be a busy day during the North American session
  • The House of Representatives voted yesterday to oppose President Trump’s declaration of emergency to fund a border wall
  • Canada reports January CPI
  • Hong Kong growth slowed sharply; Banco de Mexico releases its quarterly inflation report

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Powell Sticks to the Script; We Remain Bullish on Equities and the Dollar

Fed Chairman Powell testified before the Senate today and the House tomorrow. Not much has changed since the January 30 FOMC meeting and so Powell basically hewed to the Fed’s recent script of stressing “patience” and “flexibility.” We remain bullish on equities and the dollar and bearish on bonds. Continue reading “Powell Sticks to the Script; We Remain Bullish on Equities and the Dollar”

From the Securities Lending Trading Desk – Week of February 25

In the US last week, investors reacted positively after Yeti (YETI) reported encouraging fourth-quarter earnings where sales beat street forecasts. In Asia Pacific, Investors dumped shares in Bingo Industries after it downgraded its full year profit forecast by 20 percent last week. In Europe, Wirecard (WDI GY) is back in the news this week after a German regulator introduces a short sell ban on the Bavarian payment processor.

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Sterling Shines on Rising Brexit Optimism

  • Markets are mostly quiet as fresh drivers are awaited
  • The main event today will be Powell’s semi-annual Humphrey-Hawkins testimony before the Senate
  • It seems a Brexit delay is becoming more and more likely
  • Tensions between India and Pakistan remain high
  • National Bank of Hungary is expected to keep policy steady

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