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 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
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.