The dollar rally is back on track as the divergence theme re-emerges. DXY traded last week at its highest level since April 2 and is on track to test that day’s cycle high near 97.71. For EM, that has translated into broad-based losses this past week. ARS, RUB, and a handful of other were able to notch small gains last week, but most EM currencies were down against the greenback. COP, BRL, ZAR,…
23 Apr 2019
EM FX is coming off a good week, capitalizing on broad-based dollar weakness. Better than expected data out of China helped boost market sentiment too. Key US and China data will come out this week and should help determine the short-term outlook for the dollar.
15 Apr 2019
The world isn’t the only thing heating up. As issues of governance and climate change continue to dominate headlines, financial institutions are facing growing pressure from governments and public opinion alike to integrate Environmental, Social and Governance (ESG) considerations into day-to-day operations – in everything from how they lend or invest to how they run their operational facilities.
11 Apr 2019
The dollar was firmer against the majors but softer against EM FX last week. This divergence is unlikely to last. Which is giving the true signal? We believe the broad-based dollar rally remains intact due to our constructive view on the US economy. As such, we expect EM FX to resume weakening in the coming days.
8 Apr 2019
EM FX saw broad-based weakness last week. The only exceptions were TRY (+3.5%) and CNY (+0.1%). The former’s gains were driven in large part by official efforts to stabilize it ahead of Turkish local elections this weekend. These gains are artificial and not sustainable, in our view. The global backdrop remains challenging for EM, as global growth concerns appear to be taking precedent over the…
1 Apr 2019
Since Saudi Arabia’s debut sovereign sukuk issuance in 2017, the size of global sukuk markets has exploded. But primary market activity has been dominated by sovereign issuance, with corporates continuing to make up only a small share of the pipeline. Whether this trend will continue remains unclear, and raises serious questions about the long-term potential of the asset class.
1 Apr 2019
EM got hit hard last week by risk-off sentiment that picked up in the wake of the FOMC meeting. Like the recent ECB decision, markets are rightfully focusing on the global growth implications of the dovish central banks rather than the liquidity implications. The US yield curve briefly inverted last week. If sustained, it would signal a likely US recession in the next 6-24 months. This is hardly…
25 Mar 2019
Following a recent research trip to the region and conversations with bankers and investors on the ground, Bonds & Loans put together a summary of key strengths, weaknesses, opportunities and threats East African economies are set to face over the next 12 months.
19 Mar 2019
EM FX ended a good week on a strong note, with virtually every currency up against the greenback. The FOMC is likely to send a very dovish message to the markets this week. While this should help EM gain, we note that risk assets generally did not do well after the January FOMC and March ECB meetings. We think that global growth concerns will become more of an issue in the coming days.
18 Mar 2019