Tag Archive: win-thin

Emerging Markets: Week Ahead Preview

2017-01-16

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2017-01-16

EM FX ended the week mixed. Markets continue to grapple with the outlook for the so-called Trump Trade, which we believe is intact. MXN and TRY recovered from the relentless selling of recent days, but both remain vulnerable. Indeed, if the jump in US yields on Friday continues this week, most of EM should remain under pressure.

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Emerging Market: Week Ahead Preview

2017-01-03

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2017-01-03

earth
EM FX was a mixed bag over the past week. Dollar softness vs. the majors allowed some in EM to gain traction, with ZAR and PEN the biggest gainers since Christmas. On the other hand, ARS TRY, and INR were the biggest losers. With markets coming back to life, we expect EM to remain broadly under pressure as the same major investment themes remain in place.

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Emerging Markets: Week Ahead Preview

2016-12-18

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2016-12-18

EM ended the weak on a soft note, as the hawkish Fed decision continued to have reverberations for global markets. Worst performers in EM last week were CLP (-3.3%), ZAR (-2%), and KRW (-1.5%). With little fundamental news expected this week, markets may take a more consolidative tone, especially with the holidays approaching. However, we continue to believe that the global backdrop for EM remains negative.

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Emerging Markets: What has Changed?

2016-12-16

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2016-12-16

World Map
China will raise the sales tax on small cars to 7.5% in 2017. New methodology used by Turkstat to measure Turkish GDP has led to significant upward revisions. Turkish authorities are growing more concerned about the weak lira. Fitch moved the outlook on Chile. Chile’s central bank shifted to an expansionary policy bias. Colombia selected Juan Jose Echavarria to be the new central bank governor. Fitch revised the outlook on Mexico’s BBB+ rating from...

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Emerging Markets: Week Ahead Preview

2016-12-12

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2016-12-12

After the ECB meeting, we saw curve steepening in the eurozone. This is on top of curve steepening in the US since the elections. While we are nowhere near the magnitude of the 2013 Taper Tantrum, these yield curve dynamics remain negative for EM bonds and EM FX. EM equities are a different matter, supported in part by the continued post-election rally in DM equity markets. Higher commodity should also help insulate some EM countries from the...

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Emerging Markets: What has Changed

2016-12-10

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2016-12-10

Hong Kong Chief Executive Leung Chun-ying said he won’t seek a second term. Korea’s parliament voted 234-56 to impeach President Park. Czech National Bank raised the possibility of negative rates to help manage the currency. A Brazilian Supreme Court justice removed Senate chief Renan Calheiros from his post, but was later overturned by the full court. Brazil central bank signaled a possibly quicker easing cycle.

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Emerging Markets: What has Changed

2016-11-19

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2016-11-19

Malaysia appears to have enacted a subtle change in FX policy. Turkey cut foreign currency reserve requirements in an effort to increase the supply of foreign exchange. Brazil’s central bank suspended the sale of reverse currency swaps and started selling new regular swaps (equivalent to selling USD). Colombia reached a new peace agreement with FARC rebels. Mexico's central bank hiked cash rates by 50 bp.

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Emerging Markets: Week Ahead Preview

2016-11-08

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2016-11-08

Planet Earth
EM should trade firmer this week on news over the weekend that the FBI said its conclusion on Clinton’s emails remained unchanged. That should lift the cloud of suspicion that grew when the FBI said new emails had been uncovered. With risk appetite likely to rebound a bit, the Mexican peso should benefit the most as the week gets under way.

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Emerging Market: Week Ahead Preview

2016-10-31

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2016-10-31

EM ended the week on a soft note, as markets were taken off guard by news that the FBI was reopening its investigation of Hillary Clinton’s emails. Risk off trading hit MXN particularly hard. FOMC meeting this week should be a non-event, but markets are likely to remain volatile ahead of the November 8 elections in the US.

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Emerging Markets: What has Changed

2016-10-30

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2016-10-30

GDP, Consumer Inflation and Current Accounts
Chinese President Xi has strengthened his grip on power. Mozambique said it is in “debt distress” and hired advisors for a debt restructuring. South Africa revised its macro forecasts in the Finance Ministry’s Medium-Term Budget Program.Chile’s ruling center-left coalition lost municipal elections.In the EM equity space as measured by MSCI, Poland (+3.2%), Chile (+3.1%), and Hungary (+0.9%) have outperformed this week, while the Philippines...

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Emerging Markets: What has Changed

2016-10-17

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2016-10-17

Stock Markets Emerging Markets October 12
Fitch upgraded Taiwan by a notch. Thailand has a new king. South Africa’s Finance Minister Gordhan has been summoned to appear in court to face charges. Brazil’s Congress voted to approve a constitutional amendment to freeze government spending in real terms for at least the next 10 years. Brazil’s Petrobras cut fuel prices and introduced a new pricing mechanism.

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Emerging Markets: Week Ahead Preview

2016-10-09

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2016-10-09

Despite the weaker than expected US jobs report, the dollar remains firm and EM is ending the week on a soft note. The main culprit was higher US rates, with the 2-year yield moving up to 0.85% and is the highest since early June. Concerns about Brexit impact and as well the health of European banks remain ongoing and could weigh on risk sentiment this coming week. Lastly, oil may come under more pressure after Russia said it sees no deal with...

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Emerging Markets: What has Changed

2016-09-30

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2016-09-30

Tensions between India and Pakistan are rising. The Philippine government ordered the suspension of three quarters of the nation’s mines. Czech central bank sounds more confident of the cap exit. Poland’s Finance Minister Szalamacha was sacked. Moody's downgraded Turkey one notch to Ba1 with a stable outlook. The Brazilian central bank's quarterly inflation report set the table for the easing cycle to start.

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Emerging Markets: Preview of the Week Ahead

2016-09-19

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2016-09-19

EM ended the week on a soft note. Volatility is likely to remain high as markets are jittery and choppy ahead of the BOJ/FOMC meetings on Thursday. Dollar gains were broad-based last week, but EM certainly underperformed. China markets will reopen after a two-day holiday, but good news out of the mainland is doing little to help EM.

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Emerging Markets: What has Changed

2016-09-16

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2016-09-16

The IEA forecast that the surplus in global oil markets will last for longer than previously thought. Philippine President Duterte called for US troops to leave the southern island of Mindanao. Relations between Poland and the EU are deteriorating. Former head of Brazil’s lower house Eduardo Cunha was expelled and banned from public office for eight years. Brazil’s central bank cut the amount of daily reverse swap contracts sold to 5,000.

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Emerging Markets: What has Changed

2016-08-19

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2016-08-19

China unveiled a second equity link that will allow foreign investors to buy local stocks with fewer restrictions. Saudi Arabia will allow qualified foreign investors to subscribe to local IPOs starting this January. South Africa’s two main opposition parties agreed to informally band together in local governments. The Brazilian central bank decreased the daily intervention amount to 10,000 reverse swap contracts from 15,000 before, just a week...

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Emerging Markets: Preview of the Week Ahead

2016-08-07

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2016-08-07

EM ended last week on a firm note, despite the stronger than expected July jobs report. As we suspected, one strong US data point is not yet enough to derail the dovish Fed outlook. With the RBA and BOE cutting last week and the RBNZ expected to cut this week, the global liquidity backdrop remains supportive for EM and risk.

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Emerging Markets: Preview of the Week Ahead

2016-07-31

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2016-07-31

EM ended last week on a firm note, helped by the weaker than expected US Q2 GDP report as well as the small bounce in oil. With the RBA and BOE expected to ease this week, the global liquidity backdrop remains favorable for EM and “risk.” US jobs report Friday will be very important for EM going forward. We get our first glimpse of the Chinese economy for July with the PMI readings this week.

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Emerging Markets: Week Ahead Preview

2016-07-25

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2016-07-25

EM ended the week on a soft note, as the dollar reasserted broad-based strength against most currencies. The FOMC meeting this week could see the Fed push back against the market’s dovish take on policy, in which case EM would be likely to remain under pressure.

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Emerging Markets: What has Changed

2016-07-22

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2016-07-22

The New York Times reported that the US is preparing to seize $1 bln in assets tied to 1MDB. S&P downgraded Turkey a notch to BB with a negative outlook, citing political uncertainty. Turkish President Erdogan declared a three-month state of emergency. The Nigerian Naira weakened above 300 per dollar for the first time. Brazil’s central bank signaled a longer wait until it cuts rates.

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