by Stock Markets EM FX was mixed last week. The rebound in oil helped some, such as COP, RUB, and MXN. On the other hand, idiosyncratic political risks weighed on South Africa. This week could pose a challenge to EM, with lots of Fed speakers, FOMC minutes, and US jobs data. Stock Markets Emerging Markets, March 29 Source: economist.com - Click to enlarge Thailand Thailand reports March CPI Monday, which is expected to rise 1.30% y/y vs. 1.44% in February. If so, this would be moving closer to the bottom of the 1-4% target range. BOT just left rates steady at 1.5% last week. We expect inflation to pick up again, and so BOT should tilt more hawkish as the year progresses. Next policy meeting is May 24, and we expect steady rates again. Indonesia Indonesia reports March CPI Monday, which is expected to rise 3.80% y/y vs. 3.83% in February. The target range is 3-5%, but Bank Indonesia has signaled that the easing cycle is over, and should lean more hawkish this year if inflation continues to rise. Next policy meeting is April 20, we expect rates to be kept steady at 4.75%. Turkey Turkey reports March CPI Monday, which is expected to rise 10.70% y/y vs. 10.13% in February.
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Stock MarketsEM FX was mixed last week. The rebound in oil helped some, such as COP, RUB, and MXN. On the other hand, idiosyncratic political risks weighed on South Africa. This week could pose a challenge to EM, with lots of Fed speakers, FOMC minutes, and US jobs data. |
Stock Markets Emerging Markets, March 29 Source: economist.com - Click to enlarge |
ThailandThailand reports March CPI Monday, which is expected to rise 1.30% y/y vs. 1.44% in February. If so, this would be moving closer to the bottom of the 1-4% target range. BOT just left rates steady at 1.5% last week. We expect inflation to pick up again, and so BOT should tilt more hawkish as the year progresses. Next policy meeting is May 24, and we expect steady rates again. IndonesiaIndonesia reports March CPI Monday, which is expected to rise 3.80% y/y vs. 3.83% in February. The target range is 3-5%, but Bank Indonesia has signaled that the easing cycle is over, and should lean more hawkish this year if inflation continues to rise. Next policy meeting is April 20, we expect rates to be kept steady at 4.75%. TurkeyTurkey reports March CPI Monday, which is expected to rise 10.70% y/y vs. 10.13% in February. Inflation is moving further above the 3-7% target range, and the central bank hiked the Late Liquidity Window lending rate 75 bp to 11.75% at its last policy meeting. If price pressures continue to rise, the central bank may have to tighten again at its next policy meeting April 26. KoreaKorea reports March CPI Tuesday, which is expected to rise 2.1% y/y vs. 1.9% in February. The inflation target is 2%, and so BOK should tilt more hawkish if inflation continues to rise. Next BOK meeting is April 13, and we expect rates to be kept steady at 1.25%. Korea reports February current account data Wednesday. HungaryHungary reports February retail sales Tuesday, which are expected to rise 3.5% y/y vs. 3.8% in January. It reports February IP Wednesday, which is expected to rise 3.0% y/y vs. 1.6% in January. February trade will be reported Friday. The economy remains robust, and yet the central bank just eased policy more than expected last week. The cap on 3-month deposits was cut to HUF500 bln for end-Q2 from HUF750 bln for end-Q1. BrazilBrazil reports February IP Tuesday, which is expected to rise 0.4% y/y vs. 1.4% in January. March IPCA inflation will be reported Friday, which is expected to rise 4.57% y/y vs. 4.76% in February. Inflation continues to move closer to the 4.5% target, and remains well within the 2.5-6.5% target range. As such, markets are looking for a 100 bp cut to 11.25% at the next COPOM meeting April 12. PhilippinesThe Philippines reports March CPI Wednesday, which is expected to rise 3.4% y/y vs. 3.3% in February. The target range is 2-4%. We expect the central bank to tilt more hawkish if inflation continues to rise. Next policy meeting is May 11, we expect rates to be kept steady at 3%. Czech RepublicCzech Republic reports February retail sales Wednesday, which are expected to rise 3.4% y/y vs. 7.7% in January. It reports February trade, industrial and construction output Thursday. The real economy remains firm even as inflation picks up. The CNB just left policy steady last week. We expect the CNB to exit its koruna cap at either its May 4 or June 29 policy meetings. PolandNational Bank of Poland meets Wednesday and is expected to keep rates steady at 1.5%. Officials continue to believe that tightening won’t be needed until 2018. However, with CPI rising 2.2% in February and accelerating, we believe the first rate hike will be seen in H2 2017. ColombiaColombia reports March CPI Wednesday, which is expected to rise 4.74% y/y vs. 5.18% in February. If so, this would move inflation closer to the 2-4% target range. The central bank has cut rates several times already, and appears likely to cut 25 bp again to 6.75% at the next policy meeting April 28. TaiwanTaiwan reports March CPI Thursday, which is expected to rise 0.70% y/y vs. -0.04% in February. The central bank has no explicit inflation target, and kept rates steady at its quarterly policy meeting in March. If inflation picks up, the central bank should tilt more hawkish. ChinaCaixin March services and composite PMI will be reported Thursday. Caixin reported China March manufacturing PMI Friday at 51.2 vs. 51.7 expected, while official manufacturing PMI was reported last week at 51.8 vs. 51.7 expected. Despite the divergence in these two series, markets appear comfortable with the mainland economic outlook. RussiaRussia reports March CPI Thursday, which is expected to rise 4.3% y/y vs. 4.6% in February. The central bank surprised markets with a 25 bp cut to 9.75% last month, despite inflation being above the 4% target. The bank signaled a cautious easing stance and so we see no rate cut at the next policy meeting April 28. IndiaReserve Bank of India meets Thursday and is expected to keep rates steady. It signaled an end to the easing cycle at its last meeting in February. Since then, price pressures have risen and the economy has picked up. While the RBI has tilted more hawkish, we see no rate hikes until late 2017 or early 2018. IsraelIsraeli central bank meets Thursday and is expected to keep rates steady. CPI rose 0.4% y/y in February, and is moving closer to the 1-3% target range. While there is no need for any further stimulus, we do not expect the tightening cycle to begin until 2018. However, the central bank is likely to continue buying USD to prevent excessive ILS strength. PeruPeru’s central bank meets Thursday and is expected to keep rates steady at 4.25%. With inflation picking up to 3.25% in February, we think caution is warranted. Once inflation moves into the 1-3% target range, we think the central bank consider starting the easing cycle near mid-year. ChileChile reports March CPI Friday, which is expected to remain steady at 2.7% y/y. If so, inflation would remain below the 3% target. March trade will be reported that day also. The economy remains weak, prompting the central bank to cut rates this year. The next policy meeting is April 13, and another 25 bp cut to 2.75% is possible. MexicoMexico reports March CPI Friday, which is expected to rise 5.32% y/y vs. 4.86% in February. Banco de Mexico just hiked rates 25 bp last week to 6.5%, as expected. If inflation continues to move further above the 2-4% target range, another 25 bp hike is likely at the next policy meeting May 18. |
GDP, Consumer Inflation and Current Accounts The Economist poll of forecasters, April 2017 Source: Economist.com - Click to enlarge |
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