What Has Changed in EM

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  • Thailand announced general elections will be held in November 2018
  • Czech police filed criminal charges against ANO leader Andrej Babis
  • South Africa President Zuma may face corruption charges that were previously dropped
  • The US suspended visa services for travelers from Turkey
  • Kenyan opposition candidate Odinga withdrew from a redo of the annulled presidential election
  • Saudi Arabia will take a more gradual approach to removing fuel subsidies
  • Former Mexican First Lady Zavala said she’s leaving PAN to run as an independent Continue reading

EM Preview for the Week Ahead

blog-icons-empreview emerging markets previewEM FX ended the week under pressure, as US data points to a rate hike in December and perhaps more in 2018.  FOMC minutes this Wednesday will be closely studied for clues.  US retail sales and CPI data Friday will also be important.  We believe the most vulnerable currencies in this environment are ZAR and TRY, but one could also add MXN and perhaps RUB to that mix too. Continue reading

What Has Changed in EM

IconIn the EM equity space as measured by MSCI, China (+4.1%), South Africa (+3.2%), and Hungary (+2.4%) have outperformed this week, while Egypt (-2.8%), Qatar (-2.7%), and Mexico (-1.7%) have underperformed.  To put this in better context, MSCI EM rose 1.9% this week while MSCI DM rose 0.6%.

In the EM local currency bond space, Argentina (10-year yield -13 bp), Nigeria (-5 bp), and Thailand (-4 bp) have outperformed this week, while Mexico (10-year yield +20 bp), Brazil (+17 bp), and Poland (+14 bp) have underperformed.  To put this in better context, the 10-year UST yield rose 4 bp to 2.38%.

In the EM FX space, CLP (+0.8% vs. USD), CZK (+0.4% vs. EUR), and ILS (+0.3% vs. USD) have outperformed this week, while MXN (-1.6% vs. USD), TRY (-1.6% vs. USD), and ZAR (-1.3% vs. USD) have underperformed. Continue reading

EM Preview for the Week Ahead

blog-icons-empreview emerging markets previewEM FX firmed Friday, but capped off a bad week overall.  US jobs data this Friday is unlikely to provide much clarity on Fed policy, though we think it remains on track to hike again in December.  The Fed’s balance sheet reduction will start this month.  We remain negative on EM, and believe selling pressures are likely to persist in Q4. Continue reading