by EM FX was mostly firmer last week. ZAR, PEN, and CLP outperformed while TRY, HUF, and CNY underperformed. MSCI EM traded at new highs for the cycle but ran out of steam near the 1110 area, while MSCI EM FX lagged a bit and has yet to surpass its July high. Overall, the backdrop for EM remains constructive but investors must be prepared to differentiate amongst credits in 2020. AMERICAS Mexico reports mid-December CPI Monday, which is expected to rise 2.71% y/y vs. 3.10% in mid-November. If so, inflation would be the lowest since August 2016 and would move further below the 3% target. November trade will be reported Friday, where a -4 mln deficit is expected. Banco de Mexico just cut rates 25 bp last week and is likely to continue cutting in 2020.
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EM FX was mostly firmer last week. ZAR, PEN, and CLP outperformed while TRY, HUF, and CNY underperformed. MSCI EM traded at new highs for the cycle but ran out of steam near the 1110 area, while MSCI EM FX lagged a bit and has yet to surpass its July high. Overall, the backdrop for EM remains constructive but investors must be prepared to differentiate amongst credits in 2020.
AMERICAS
Mexico reports mid-December CPI Monday, which is expected to rise 2.71% y/y vs. 3.10% in mid-November. If so, inflation would be the lowest since August 2016 and would move further below the 3% target. November trade will be reported Friday, where a -$104 mln deficit is expected. Banco de Mexico just cut rates 25 bp last week and is likely to continue cutting in 2020.
Colombia central bank releases its minutes Monday. Last week, the bank elected to keep rates steady at 4.25%, as expected. Bloomberg consensus sees steady rates through H1 2020 followed by potential for a hike in H2. We not think the bank will start a tightening cycle next year, especially if the peso remains firm.
EUROPE/MIDDLE EAST/AFRICA
Central Bank of Russia releases its quarterly monetary policy report Monday. Earlier this month, the bank cut ratees 25 bp to 6.25%. The move was expected, and it signaled further cuts are likely to be seen in 2020. Bloomberg consensus sees only one more 25 bp cut in this cycle but we believe there will be two or three more, especially if the ruble continues to firm.
Israel’s Likud party holds a leadership vote Thursday. Prime Minister Netanyahu faces a challenge by his former Education Minister Gideon Sa’ar. The challenge is the first serious one for Netanyahu and comes ahead of general elections scheduled for March 2. Rival Blue and White leader Gantz has signaled willingness to rule in coalition with Likud as long as it is not led by Netanyahu.
ASIA
Korea reports trade data for the first twenty days of December Monday. Last week, Taiwan November export orders contracted a much larger than expected -6.6% y/y. This was the worst reading since August and suggests little relief for the region over the next six months. We expect Korea trade data to confirm this.
Singapore reports November CPI Monday, which is expected to rise 0.6% y/y vs. 0.4% in October. The MAS does not have an explicit inflation target. However, low price pressures should allow it to loosen policy again at its semiannual policy meeting in April. November IP will be reported Thursday, which is expected to rise 0.1% y/y vs. 4.0% in October.
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