By Torrie Callander, CFA & Canberk Yalcin Emerging Market (EM) currencies have already regained much of the ground lost in H1 2020. We therefore expect a more heterogeneous set of factors to drive opportunity in 2021, as opposed to any homogenous, broad-based EM recovery. Traditional factors such as carry, value and growth should …read more
Summary In the quiet after the storm, this blog post hopes to take stock of what happened in the US election, why markets were surprised, what the results means for US policy (fiscal, monetary, foreign, climate) going forward, and the implications of this for US and global growth, equities and FX markets. What happened? The …read more
The global trend towards lower interest rates, exacerbated by the COVID-19 crisis, has led to an environment of suppressed yields and asymmetric risk such that traditional investments no longer offer the most efficient avenue to express macro views. Currency markets can act as the last great equilibrator when it comes to levelling-up asset valuations, …read more
Summary: The Russian rouble has been a significant underperformer in EM FX over the course of last 10 days Our analysis suggests that some of the underperformance might be an overreaction and hence provide a good entry point for investors considering a long RUB position or investment in local currency assets given that the currency …read more
The economic effects of COVID-19 have triggered many questions regarding price dynamics in the aftermath of the pandemic Inflation is affected by many domestic and foreign factors, which often differ between countries. CPI inflation is the most common measure of inflation but is it the most accurate or useful? The COVID-19 pandemic has caused substantial …read more
A black swan. A doomsday scenario. COVID-19. They are synonymous. A global recession is now inevitable and economic damage control remains key in a global pandemic that has decimated business-as-usual. As of this morning, White House officials have emerged from negotiations confident they will reach a deal by the end of the day on a …read more
The debt-to-GDP ratio does not represent the full scope of government liabilities, potentially calling for alternative measures of a government’s default risk. Monetary policy constraints and demographic pressures are likely to call for increases in fiscal spending, further straining governments’ balance sheets The sustainability of a government’s balance sheet is likely to depend on the origin …read more
The Canadian economy has been growing at a moderate pace however household debt has reached historical highs, raising the question of its sustainability and risks to the economy There is clear consensus among market participants and Canadian investment professionals regarding the outcome of the election The 2016 US elections and Brexit vote have resulted in …read more
The concept of stability in the Chinese currency has been of great interest to investors, especially since the introduction of the People’s Bank of China’s (PBoC) preferred measure of CNY strength, the ‘CFETS index’. As it stands, the official stance of Chinese policymakers is to manage the bilateral exchange rate versus USD such that CNY …read more
2018 was a tough year for the EUR/USD exchange rate. After a false start in January, the euro fell from its high of 1.25 versus the dollar to 1.14 by year end. The pair had to contend with a number of pressures including an up-rating of the market’s expectations around US monetary policy, US-centric trade …read more
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