Category Archive: 5.) Brown Brothers Harriman

ECB Preview, March 11

Christine Lagarde will chair her third ECB meeting Thursday.  She faces growing risks of recession but also widespread skepticism within the ECB regarding the efficacy of negative rates.  Markets have priced in several rate cuts this year.  Here, we discuss what measures the ECB may take this week.

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Dollar Firm as Global Financial Markets Calm

Global financial markets are finally seeing a measure of calm return; local Chinese media is sounding more confident that the situation is now under control. The White House will announce fiscal measures today; five states hold primaries and one holds a caucus with 352 total pledged delegates up for grabs.

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Drivers for the Week Ahead

Risk-off sentiment continues to build as the coronavirus spreads. Fed easing expectations continue to intensify; February inflation readings for the US will be reported this week. The ECB meets Thursday and markets are split; the stronger euro is doing the eurozone economy no favors. The UK has a heavy data release schedule Wednesday; UK government also releases its budget that day.

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Updated Democratic Primary Timeline

Super Tuesday has come and gone. Bloomberg has suspended his campaign after an extremely poor showing, and Warren is expected to follow suit soon. Here is our updated take on the likely Democratic candidate.

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Drivers for the Week Ahead

The dollar has softened as Fed easing expectations have picked up. Late Friday, Chair Powell issued an unscheduled statement saying the Fed is monitoring the virus and will act as appropriate. This is a big data week for the US; the Fed releases its Beige Book report Wednesday. Super Tuesday comes this week; Bank of Canada meets Wednesday.

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Dollar Mixed as Coronavirus News Stream Deteriorates

The virus news stream continues to deteriorate. Lower US yields and growing concerns about the spread of the coronavirus in the US are taking a toll on the greenback. OPEC officials are trying to work out another supply cut; The outlook for Turkey is going from bad to worse. Simply put, there is nothing the Fed can do to address the economic impact of supply chain disruptions and social distancing.

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Seven Big-Picture Considerations for Covid-19

Below is a non-exhaustive list of medium- and long-term implications from the Covid-19. We discuss the yuan, China’s competitiveness, its position in the global production chains, the impact on the Phase One trade deal, and rising financial stability risks. Globally, the virus will bring about a new wave of fiscal spending and revive the discussions about the limits of monetary policy.

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EM Preview for the Week Ahead

The still-growing impact of the coronavirus should keep EM and risk sentiment under pressure this week.  The weekend G20 meeting in Saudi Arabia acknowledged the risks to the global economy and said participants agreed on a “menu of policy options.” However, the G20 offered little specific in terms of a coordinated policy response.

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DM Equity Allocation Model For Q1 2020

Developed equity markets remain near the highs despite mounting concerns about the impact of the coronavirus. MSCI World made a new all-time high last week near 2435 and is up 2.5% YTD. Our 1-rated grouping (outperformers) for Q1 2020 consists of Ireland, Israel, New Zealand, Spain, and Switzerland.

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Dollar Firm as Risk-Off Sentiment Picks Up Again

Negative news on the coronavirus has kept risk appetite subdued across the board; the dollar rally continues. During the North American session, we will get some more clues to the state of the US economy; FOMC minutes were largely as expected. UK January retail sales came in firm; ECB releases the account of its January 23 meeting.

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Drivers for the Week Ahead

We get the first February data from the US manufacturing sector this week; the US economy remains strong; FOMC minutes will be released Wednesday. Canada reports some key data this week. Preliminary eurozone February PMI readings will be reported Friday; UK has a busy data week.

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Virus Concerns Resurface

Markets are reacting badly to upward revisions to coronavirus cases in China. The euro fell to the weakest level since mid-2017 against the dollar. UK housing data adds to relatively upbeat figures since the December elections. Malaysia’s government is joining in the counter-cyclical fiscal effort.

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Drivers for the Week Ahead

Risk-off sentiment intensified last week; the dollar continues to climb. This is another big data week for the US; the US economy remains strong. Fed Chair Powell testifies before the House Tuesday and the Senate Wednesday; the Senate holds confirmation hearings for Fed nominees Shelton and Waller Thursday.

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Dollar Firm Ahead of US Jobs Report

The number of confirmed coronavirus cases and deaths continue to rise; the dollar continues to climb. The January jobs data is the highlight for the week; Canada also reports jobs data. The Fed submits its semiannual Monetary Policy Report to Congress today; Mexico and Brazil report January inflation data.

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Dollar Firm as Markets Await Fresh Drivers

China cut tariffs on $75 bln of US imports by half, while the US said it could reciprocate in some way. The dollar continues to climb; during the North American session, only minor data will be reported; Brazil cut rates 25 bp. Germany reported very weak December factory orders; all is not well in the German state of Thuringia.

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Dollar Mixed as Some Risk Appetite Returns

The dollar continues to climb; one of side-effects of the virus has been a swelling of the amount of negative yielding debt globally. The US primary season got off to a rocky start for the Democrats. During the North American session, December factory orders will be reported; the US economy remains strong.

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EM Preview for the Week Ahead

EM remains vulnerable to deteriorating risk sentiment as the coronavirus spreads.  China announced a series of measures over the weekend to help support its financial markets, but this may not be enough to turn sentiment around yet.  China markets reopen Monday after the extended Lunar New Year holiday and it won’t be pretty.

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Dollar Firm Ahead of BOE Decision

The World Health Organization called an emergency meeting today; the dollar continues to climb. The FOMC meeting was a non-event; US advance Q4 GDP will be reported. Risk-off sentiment has derailed curve steepening trades. Implied rates still suggest that today’s BOE meeting is a coin toss.

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Tentative Stabilization

Risk-off continues in Asia, but moves have been less dramatic. European market jittery but stable. Implied rates now pricing in a full Fed cut by September. The UK will announce its decision on Huawei’s access to the country’s 5G network.

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Sharp Sell-Off on Virus Concerns

Global stocks lower on virus fears, yen appreciates, and yield curves flatten. Oil prices continue to fall while gold rises. Italian assets outperform on favorable election results for ruling coalition. German IFO survey disappoints, trimming nascent green shoots.

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