Mexico Fundamentals Are Solid
By Win Thin and Ilan Solot We do not expect any rate cuts by the Mexican central bank (Banxico) this year, but we could see some of the easing priced in (about 15 bp cut for the year) being taken out...
View ArticleIran now in economic turmoil
By Win Thin Recent developments in Iran are worth discussing. We feel that with Middle Eastern political risk on the rise lately, Iran is more likely to have the largest impact on global markets,...
View ArticleAusterity Brings Down Another European Government
By Win Thin Recent Bulgarian developments are worth discussing. Austerity just brought down another European government, as Prime Minister Borisov and his cabinet resigned this week amidst rising...
View ArticleSerious turbulence in Emerging Markets as assets re-price globally
By Win Thin and Ilan Solot from yesterday What has changed? In short, pretty much everything. The FOMC meeting and the market reaction has fed into a deeper re-pricing of assets globally. The selloff...
View ArticleWhat has changed in EM: China, Brazil, Turkey, Indonesia, Czech
By Win Thin and Ilan Solot The “lesson” is over in China. Brazil is in flux and there is some room to be optimistic. Indonesia is finally increasing subsidized fuel prices. The Turkish central bank...
View ArticleEM Preview for the week ahead
By WIn Thin and Ilan Solot Brazil reports June trade data later on Monday, followed by June FIPE inflation and IP on Tuesday, services PMI on Wednesday, and IPCA inflation on Friday. IPCA is seen...
View ArticleEmerging Market FX and Equities – A comprehensive overview
By Win Thin We think it would be a good idea to take a step back to see how EM FX and equities have performed during this recent bounce. Many EM currencies peaked against the dollar and the euro in...
View ArticleIndonesia: Falling Behind the Curve
By Win Thin and Ilan Solot Bank Indonesia has fallen far behind the curve in its currency management tactics. After fairly steady intervention kept USD/IDR trading near the 10,000 area from May through...
View ArticleEM Preview For the Week Ahead: 2014-01-13
By Win Thin and Ilan Solot Despite the growing tensions in Thailand and the risk of military involvement, equity indices stared off the week higher and THB stable. There is some optimism that a...
View ArticleArgentina – From Bad to Worse
We appear to be on the cusp of a more serious crisis in Argentina, as things are moving from bad to worse. Spot ARS has dropped as much as 20% earlier today, while the implied “blue chip” FX rate has...
View ArticleRecent Policy Developments in Russia
Russian Economy Minister Ulyukayev proposed a possible delay to the ruble free float from the current 2015 target. Remarks are noteworthy, as most officials have consistently said the float would come...
View ArticleThe latest picture in Emerging markets and EM currencies
By Win Thin and Ilan Solot With their backs against the wall, policy changes are ramping up amongst major EM countries. Yet the positive impact has been limited so far. We do note that countries that...
View ArticleThe carry trade, emerging markets and Japanese retail investors
By Win Thin Weekly MOF data show Japanese investors have sold foreign bonds for five straight weeks through January 31, and in six of the past seven. Total outflows seen in those six weeks has been...
View ArticleNo near-term currency regime change in China
By Win Thin and Ilan Solot Spot USD/CNY closed above the fix today for the first time since September 2012. We saw a prolonged period of this in Q2 and Q3 2012, right after the last band widening. But...
View ArticleA Short History Lesson On Ukraine and Crimea
By Win Thin A little history lesson about Ukraine and Crimea may help put recent developments into better perspective. What emerges is a very clear understanding of why both Russia and Ukraine feel...
View ArticleAnother Short History Lesson On Russia and Ukraine
By WIn Thin Parallels have already been drawn between current events in Ukraine and the Russian-Georgian conflict of 2008. These parallels are unmistakable, yet the one big difference so far is that...
View ArticleEM Preview: The Crimean crisis threatens to escalate
By Win Thin and Ilan Solot The Crimean crisis threatens to escalate again this week. Russian forces in Crimea have been increased and they are consolidating their control of Crimea. This involves...
View ArticleEM: Escalation in Crimea, China concerns, Brazilian inflation and more
By WIn Thin and Ilan Solot 1) The annexation of Crimea by Russia represents an important escalation of the crisis 2) China has re-emerged as a concern for markets 3) Turkish political tensions are...
View ArticlePBOC Announces CNY Band-Widening
By Win Thin The PBOC announced a band-widening for USD/CNY over the weekend, doubling the allowable band around the fix rate to +/- 2%. Off of Friday’s fix, the new band is 6.01-6.26 vs. 6.07-6.20...
View ArticleEmerging Market Equity Allocation Model for Q2 2014
By Win Thin INTRODUCTION EM and DM equities diverged in 2013, as MSCI EM (-5.1%) and MSCI DM (+23.7%) moved in opposite directions for the first year since 1998. This divergence has ended (for now) in...
View ArticleMoody’s Monday Mass Downgrade
By Win Thin With Moody’s mass downgrades coming today after the long-awaited euro zone downgrades by S&P last month, we thought it would be useful to assess again just how close current ratings are...
View ArticleSovereign debt implications for Netherlands are negative for France and...
By Win Thin Early Dutch elections appear certain now as, contrary to press reports late last week, budget talks collapsed over the weekend with no deal at hand. The cabinet held an emergency meeting...
View ArticleArgentina Fundamentals Still Deteriorating
By Win Thin After all the media coverage of Argentina’s move to seize a controlling stake in oil company YPF, there are still some points worth highlighting. This move is simply the latest in a string...
View ArticleEU Restarts Talks With Hungary
By Win Thin The European Commission cleared the way today to start talks for an aid program for Hungary, citing “sufficient action and commitments” from officials. Talks had been held up since...
View ArticlePBOC Rate Cut Suggests Upcoming China Data Will Be Weak
By Win Thin People’s Bank of China today cut the 1-year lending rate by 31 bp to 6% and the 1-year deposit rate by 25 bp to 3%. It also widened the allowable discount that commercial banks can offer on...
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