by We think the Fed has signaled that the bar to another cut is high. Unless the US data weakens considerably, we see rates on hold for now and this means the liquidity story for EM has worsened. Elsewhere, US-China trade talks appear to be going nowhere. With no end in sight to the trade war, we remain negative on EM. Korea reports trade data for the first 20 days of September Monday. Between the US-China trade war and Korea-Japan tensions over exports of strategic materials, we expect Korea trade numbers to remain dismal well into 2020. Next BOK meeting is October 15 and a rate cut then is possible. Singapore reports August CPI Monday, which is expected to rise 0.5% y/y vs. 0.4% in July. It reports August IP Thursday, which is expected to contract -0.6% y/y
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We think the Fed has signaled that the bar to another cut is high. Unless the US data weakens considerably, we see rates on hold for now and this means the liquidity story for EM has worsened. Elsewhere, US-China trade talks appear to be going nowhere. With no end in sight to the trade war, we remain negative on EM.
Korea reports trade data for the first 20 days of September Monday. Between the US-China trade war and Korea-Japan tensions over exports of strategic materials, we expect Korea trade numbers to remain dismal well into 2020. Next BOK meeting is October 15 and a rate cut then is possible.
Singapore reports August CPI Monday, which is expected to rise 0.5% y/y vs. 0.4% in July. It reports August IP Thursday, which is expected to contract -0.6% y/y vs. -0.4% in July. The MAS does not have an explicit inflation target. However, low price pressures and a sluggish economy should lead the MAS to ease policy at its October meeting.
Taiwan reports August IP Monday, which is expected to rise 1.6% y/y vs. 3.0% in July. Export orders contracted in August, suggesting little relief for the economy over the next six months. The central bank just left rates steady at 1.375% last week, and low inflation should allow it to maintain steady policy well into 2020.
Brazil reports August current account and FDI data Monday. COPOM minutes will be released Tuesday. Mid-September IPCA inflation will also be reported Tuesday, which is expected to rise 3.21% y/y vs. 3.22% in mid-August. The central bank releases its quarterly inflation report Thursday. Markets expect another 50 bp cut at the next meeting October 30 and another 25 bp at the December 11 meeting. Central government budget data will be reported Friday.
Colombia central bank meets Monday and is expected to keep rates steady at 4.25%. CPI rose 3.8% y/y in August, near the top of the 2-4% target range. However, the economy is sluggish and so the bank is likely to remain on hold well into 2020.
Mexico reports mid-September CPI Tuesday, which is expected to rise 3.03% y/y vs. 3.29% in mid-August. If so, inflation would be the lowest since September 2016 and nearing the middle of the 2-4% target range. Banco de Mexico meets Thursday and is expected to cut rates 25 bp to 7.75%. August trade will be reported Friday.
National Bank of Hungary meets Tuesday and is expected to keep rates steady at 0.90%. CPI rose 3.1% y/y in August, near the middle of the 2-4% target range. With the economy facing headwinds from the slowdown in Germany, the central bank is likely to keep policy on hold well into 2020.
Malaysia reports August CPI Wednesday and is expected to rise 1.5% y/y vs. 1.4% in July. Bank Negara does not have an explicit inflation target. However, low price pressures should allow the bank to continue cutting rates. Next policy meeting is November 5, no change is expected then but a dovish surprise is possible.
Bank of Thailand meets Wednesday and is expected to keep rates steady at 1.50%. CPI rose 0.5% y/y in August, below the 1-4% target range. Low inflation and sluggish growth should allow the bank to continue cutting rates. However, it just delivered a surprise 25 bp cut in August and so this month seems too soon. Next meetings are November 6 and December 18.
Czech National Bank meets Wednesday and is expected to keep rates steady at 2.0%. CPI rose 2.9% y/y in August, near the top of the 1-3% target range. Sluggish growth should keep the bank on hold well into 2020.
Bangko Sentral ng Pilipinas meets Thursday and is expected to cut rates 25 bp to 4.0%. CPI rose 1.7% y/y in August, the lowest since September 2016 and below the 2-4% target range. Low inflation and sluggish growth should allow the bank to cut rates into 2020.
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