Tag Archives: Articles

EM has been on a good run but this week will be a big test.  Brexit uncertainty may finally end.  Or it may not.  A delay would be positive for EM, whilst a potential hard Brexit would be negative.  The Fed meets Wednesday and key US data will be reported during the week, culminating with the jobs report Friday.  The dollar has been on its back foot as September data have come in weaker than expected, so any sort of positive data surprises this week could add to the...

The US-China diplomatic relationship may be entering a new stage. The balance of power between the key players – Trump, China, the US Congress, and the Democrats – is changing and their roles are being reshuffled. This might be enough to break the endless cycle of agreements and re-escalations. In short, we think both Trump and Chinese officials have a greater incentive to reach a deal (or at least not to escalate) this time around. Meanwhile, the rising antagonist...

We are beginning to become more constructive on EM. The main trigger for some optimism is the shifting US-China dynamic. In our view, the partial trade deal reveals weakness on the part of the US. Reports suggest China will begin pushing for all existing tariffs to be dropped as part of Phase 2, which would be very positive for EM. That is still likely months away but this shifting dynamic bears watching. We will be putting out a longer MarketView piece on this topic...

The dollar remains under pressure due to weak US retail sales and rising optimism on Brexit and the trade war Brexit negotiations remain tense and we should expect a higher than usual noise-to-signal ratio at this stage China said its goal is to stop the trade war and remove all tariffs US has a full data schedule; we remain constructive on the US economic outlook UK reported September retail sales; Sweden’s unemployment rate hit a 4-year high of 7.4% Australia...

Some cracks have appeared in the market’s risk-on sentiment We continue to believe that recent developments take some pressure off the Fed to cut rates again this month Our base case for a Brexit delay has been strengthened; UK reported weak labor market data The situation is Turkey continues to develop negatively for asset prices; trade data out of China once again showed the impact of the trade war and the resulting global slowdown RBA minutes were released; Japan...

EM benefited greatly from the improvement in US-China trade relations and quite possibly Brexit. The dollar is likely to remain under some pressure near-term as a result. Yet we must caution investors against getting too optimistic. The details of the partial trade deal still need to be worked out, while existing tariffs will still remain in place if the deal is signed next month as most expect. Brexit negotiations have accelerated but we note that any deal must...

Markets have seized on the possibility of a partial trade deal as well as some hopes that a hard Brexit will be avoided The main event for the day will be President Trump’s meeting with Vice Premier Liu He These market movements (if sustained) will take pressure off of the Fed to cut rates this month The notion of a “pathway” to a Brexit deal continues to capture investors’ imagination The EU will discuss sanctions on Turkey at next week’s summit; oil is up on news...

The dollar staged a stunning comeback yesterday as risk-off took hold on rising geopolitical risk; those risks remain high US-China tensions have risen ahead of trade talks that begin Thursday The US abruptly announced that it would withdraw its troops from northeast Syria US reports September PPI; German IP came in better than expected UK Prime Minister Johnson told Chancellor Merkel that a deal is “essentially impossible” Chinese markets re-opened for trading...

The dollar rally has been derailed by weak US data and rising recession fears The September jobs data was not a game-changer and so we are left waiting for more clues Believe it or not, the US economy remains solid; however, the US repo market has not fully normalized yet The Chinese trade delegation arrives in Washington Thursday for two days of trade talks Brexit optimism has worn off; there are several key EM events . The dollar rally has been derailed by weak US...

The US repo market appears to finally be normalizing. The low pace of normalization is concerning and so a more permanent solution may be needed to head off similar problems at year-end. We do not think this issue has any implications for the economic outlook, which we continue to view as solid. RECENT DEVELOPMENTS The repo market provides an efficient, reliable, and predictable channel to raise short-term funding. It is but one part of a larger short-term funding...