Emerging Markets

1) The PBOC signalled more stability in the yuan, and that is what we have, 2) The official survey by the Brazilian central bank is now showing an average forecast for 2016 GDP in negative territory for the first time,...

With the all the euphoria about the Chinese currency depreciation apparently behind us, we can again focus on other drivers for EM assets. In addition, these are developments in G10, commodity prices and idiosyncratic factors. We do not expect any...

1) China has changed its FX regime, 2) No coalition likely for Turkey; elections in sight, 3) Moody’s downgraded Brazil one notch to Baa3, but did not assign a negative outlook, 4) Baxico sounded a bit more hawkish, at least...

Recently, the International Olympic Committee (IOC) awarded the 2022 Winter Games to Beijing, in a joint bid with the city of Zhangjiakou, the capital’s “northern door” adjoining mountains with ski resorts. In the West, the response has been apprehensive, presumably...

EM is starting the week with a mixed tone.  EM currencies are on the weaker side but EM equities are generally firmer, especially in China as weaker data spur calls for more stimulus.  Stabilizing commodity prices are also helping sentiment,...

1) Poland’s lower house unexpectedly voted on a new legislation that would increase the burden of FX-linked mortgages losses to banks.  2) The popularity of the Chilean and Brazilian presidents continue to tumble. 1) Poland’s lower house unexpectedly voted on...

The fluctuations of the oil prices, the Fed’s policy rate and the U.S. dollar are intertwined. In fall 2015/spring 2016, the Fed’s impending rate hikes will cause substantial turbulence in emerging markets. Until recently, oil prices were recovering. However, after...

EM again starts the week on the back foot, but losses are (for now) concentrated in the commodity currencies.  With commodities (except for iron ore) already under pressure again, this trend looks set to continue.  US jobs data Friday is...

1) S&P revised Brazil’s BBB- rating from stable to negative, 2) Banco de Mexico announced changes to its FX intervention program, which had been rumored since last week, 3) The Russian central bank has halted its daily USD purchases and...

EM assets start the week on a softer footing.  The China situation remains unsettled, with stocks on Monday posting their biggest one-day loss in eight years.  More support measures seem likely if the rout continues.  The calm in China equity...

1) Brazil’s government cut the primary surplus target for 2015 to 0.15% of GDP, 2) The situation in Turkey is becoming even more complicated, reinforcing our view that the tail risks are increasing, 3) It appears as if Ukraine has...

EM assets are starting the week under pressure.  Idiosyncratic factors in Brazil (more political noise) and Turkey (election risks and a terrorist attack) meant that these countries are the hardest hit. EM assets are starting the week under pressure.  Idiosyncratic...

1) The Mexican oil auctions, while historic, proved to be a bit of a dud, 2) China revealed more support measures, 3) Brazil is considering an amnesty to undeclared funds held abroad, 4) Political tensions are heating up even more...

EM remains caught in global crosscurrents that are mostly negative. If risk off sentiment ebbs as Greek and Chinese tail risks fall, then that simply brings the focus back on the looming Fed lift-off. We expect EM to remain under...

1. The BRICS central banks sign an accord on $100 bln foreign currency pool.  2. South African union AMCU declared a dispute with gold producers over wages.  3. China’s recent actions to stabilize equity markets became increasingly desperate.  4. Argentina...