What Has Changed in EM


  • President Trump canceled the planned summit with North Korea’s Kim Jong Un
  • Malaysia’s new Finance Minister Lim was sworn in along with 13 other cabinet ministers
  • Philippine central bank cut reserve ratios for commercial banks by one percentage point to 18% effective June 1
  • The United Arab Emirates opened up its economy to more foreign investment
  • Brazil state-run oil company Petrobras cut the price of diesel fuel by 10% for two weeks
  • Brazil President Temer dropped his reelection bid and endorsed former Finance Minister Henrique Meirelles
  • The US tightened sanctions on Venezuela following President Maduro’s controversial election victory Continue reading

Argentine Stability Remains Tenuous


Argentinian Flag Ball – Flag of Argentina on Isolated Sphere

Argentina has been able to inject some stability into its markets with several aggressive moves.  Yet the situation remains precarious.  We believe a quick IMF deal followed by adherence to program targets are necessary but not sufficient conditions to make this stability more durable.  Argentina is likely to remain under pressure within the context of a broad-based EM sell-off. Continue reading

EM Preview for the Week Ahead

blog-icons-empreview emerging markets previewEM FX ended Friday on a weak note, and extended the slide.  For the week as a whole, the best EM performers were PHP, TWD, and SGD while the worst were ARS, ZAR, and TRY.  With US rates continuing to move higher, we believe selling pressures on EM FX will remain in play this week.  Our recently updated EM Vulnerability Table supports our view that divergences within EM will remain. Continue reading

What Has Changed in EM


  • Bank Indonesia started a tightening cycle with a 25 bp hike to 4.5%
  • Jailed Malaysia opposition leader Anwar Ibrahim was released by new Prime Minister Mahathir
  • Malaysia scrapped the controversial 6% goods and services tax (GST)
  • Violent protests shook Israel as the relocated US embassy opened in Jerusalem
  • Argentina committed to fiscal tightening as part of a comprehensive IMF program
  • Brazil central bank delivered a hawkish surprise and kept rates steady at 6.5%.
  • Mexico has started its annual oil hedging program Continue reading



Another deadline for NAFTA renegotiations is passing.  There still is some flexibility that might last a few more weeks.  The run-up to the 1 July Mexican election is a more important constraint.  Canada and Mexico are coordinating their negotiations, and they continue to resist US demands.   Trump may threaten to leave the agreement, but a successful conclusion could have positive spillover on other trade issues.

Continue reading

Drivers for the Week Ahead

Blog icons-DRIVERS

  • Geopolitical issues will continue to bubble below the surface for the capital markets
  • Trade issues are also near the surface
  • The large fiscal stimulus being provided to an economy growing above trend will encourage the Fed to look past near-term weakness in economic data
  • Japanese data will illustrate why Fed policy is still diverging from BOJ policy
  • Part of the dilemma facing the BOE will be evident with another robust jobs report Continue reading