What Has Changed in EM

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  • S&P cut China’s credit rating by a notch to A+ with stable outlook
  • In a follow-up move, S&P also cut Hong Kong’s rating by a notch to AA+ with stable outlook
  • President Trump issued an executive order that could widen sanctions on North Korea
  • Hungary’s central bank eased again
  • Saudi Arabia will reportedly phase out subsidies for gasoline by November
  • Brazil has a new Prosecutor General
  • A powerful 7.2 magnitude earthquake struck near Mexico City Continue reading

Dollar Soft as Markets Limp Into the Weekend

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  • The cycle of sanctions, recriminations, and provocative actions continues as the Trump Administration leads a confrontation with North Korea
  • S&P followed up its cut to China by taking away Hong Kong’s AAA rating
  • New Zealand goes to the polls tomorrow, with the National Party expected to beat Labour to form the next government
  • Stronger than expected eurozone PMIs were reported; the German election does not appear to be a market factor
  • Bank Indonesia is expected to keep rates steady at 4.5%; Mexico mid-September CPI is expected to rise 6.59% y/y

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Abe, BOJ, and the Yen

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There is practically no chance that the BOJ changes policy.  BOJ shares the common dilemma among major central banks. Growth is ok–above trend, which in Japan is seen as about 0.8%, but price pressures remain weak.  The core rate in Japan, which excludes fresh food, is up 0.5% year-over-year.   The target is 2%.  

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Dollar Offered Ahead of FOMC Decision

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  • The Fed is widely expected to keep the Fed funds target unchanged and announce balance sheet shrinkage
  • Strong UK retail sales report and anticipation of May’s speech at the end of the week has lifted sterling back toward $1.36
  • South Africa August CPI rose 4.8% y/y vs. 4.9% expected; SARB likely to cut 25 bp tomorrow
  • The full impact of the tragic earthquake in Mexico has not yet been determined

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From the Securities Lending Trading Desk

Mobile Phone - Low Battery

We are seeing fundamental demand pick up for Energous Corporation (WATT) after Apple announced their plans for pad-based charging for iPhones and the support of an open wireless charging standard.  Last week, the Italian-based luxury goods manufacturer Prada SpA warned investors that its turnaround plan to reshape its business may take longer than expected.  Montea SCA, the Belgium real estate property developer, announced a EUR 68 million rights issue.

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