reports
- Gustavo Rangel
Brazil: The hawks are getting louder
The Brazilian central bank is likely to move the policy guidance needle decidedly in a hawkish direction at this week's monetary policy meeting, but we don't expect a rate hike or a pre-commitment to a hike in March. A first hike is more likely in 2Q, when 2022 becomes the targeted calendar year in a policy-relevant horizon
- Chris Turner
- Gustavo Rangel
- Petr Krpata
- CFA
- Chris Turner
- Gustavo Rangel
- Petr Krpata
- CFA
- Gustavo Rangel
LATAM FX Talking/FX gains lose steam as correction takes hold
After ending 2020 with a firmly bullish momentum, LATAM FX markets are correcting, largely in reaction to rising US Treasury yields and the stronger USD. We don't expect this trend to last. In that case, we see greater scope for outperformance in Brazilian and Colombian assets, while Mexican assets remain attractive but seem nearer fair value, in our view.
- Gustavo Rangel
Mexico: Calibrating the “pause”
Mexico stands alone among LATAM majors as a country with additional material scope for monetary policy easing, through rate cuts. And since last month's policy meeting, when Banxico paused the cycle, policy drivers have turned more dovish, but we think it's too soon for monetary authorities to abandon the new neutral guidance and cut again
- Dmitry Dolgin
- Egor Fedorov
- Gustavo Rangel
- Muhammet Mercan
- Nicky Mapa
- Oleksiy Soroka
- CFA
- Padhraic Garvey
- CFA
- Peter Virovacz
- Petr Krpata
- CFA
- Rafal Benecki
- Trieu Pham
- Valentin Tataru
EM Credit Outlook: Risky Business
Key views: It's a sit up and pay attention moment when emerging markets run a collective fiscal deficit of some 10% of GDP. Eye-watering stuff that pushes the aggregate emerging markets debt/GDP ratio above 60%. That is a level that emerging market debt should not be above, but such is the effect of the 2020 crises that in fact an average of 70% of GDP is probable in the medium term. Therein lies the biggest risk for emerging markets, one that will be ever present in the coming decade. We explo...
- Gustavo Rangel
LATAM FX Talking: FX gains as risk appetite solidifies
LATAM FX markets have turned decidedly bullish in the final weeks of the year. Despite lingering concerns, notably the fiscal weakness seen throughout the region, attractive valuations and favourable prospects for higher commodity prices and a faster recovery, as the region avoids additional Covid-19 disruptions, bodes well for a constructive 2021.
- Carlo Cocuzzo
- Chris Turner
- Dmitry Dolgin
- Francesco Pesole
- Gustavo Rangel
- Iris Pang
- Joanna Konings
- Petr Krpata
- CFA
- Rob Carnell
- Trieu Pham
- Warren Patterson
- Wenyu Yao
2021 FX Outlook/Back on Track
• In 2021, exchange rates will increasingly be driven by how quickly confidence builds in a, hopefully, post-pandemic global recovery. This year has been a wild ride for FX markets, masked by a trade weighted dollar unchanged on the year. • It is clear that investors are being encouraged to move out along the credit curve and out of the dollar, too. Aggressive fiscal and monetary policy support packages have certainly helped here. • 2021 will be the year that FX markets, diverted by two years ...
- Bert Colijn
- Carsten Brzeski
- Charlotte de Montpellier
- Franziska Biehl
- Gustavo Rangel
- Iris Pang
- James Knightley
- James Smith
- Joanna Konings
- Leon Ernst
- Nicky Mapa
- Padhraic Garvey
- CFA
- Paolo Pizzoli
- Peter Vanden Houte
- Petr Krpata
- CFA
- Philippe Ledent
- Rob Carnell
- Steven Trypsteen
Global Macro Outlook 2021: The darkness before the dawn
What a year! As this wild and turbulent year draws to a close, we look back on how Covid-19 has sent the global economy into the worst slump in a century and focus on what to expect beyond lockdowns, the virus and the vaccine in 2021. We hope you enjoy our analysis as we move into a year, which could definitely do with somewhat less excitement than 2020
- Gustavo Rangel
Mexico: Banxico's balancing act
At their last policy meeting, Mexican policymakers signaled a readiness to conclude the monetary easing cycle, with a pause at this week's meeting. The risk-on market sentiment may have, however, created a window of opportunity for the implementation of one last rate cut
- Gustavo Rangel
Brazil: Inflation risks in focus
Higher-than-expected inflation was the highlight of the economic calendar in recent weeks. Near-term inflation expectations have risen, and the local yield curve steepened further, with some calling for immediate monetary policy reversal by the central bank, i.e. rate hikes. We don't expect any material hawkish shift by the central bank, howeve
- Gustavo Rangel
Mexico: Cutting short the easing cycle
Mexican policymakers seem ready to conclude the monetary easing cycle, even though the country's monetary stimulus remains unusually modest, when compared to its regional peers. The expected 25bp rate cut at this week's meeting, to 4.25%, should be the last of the current cycle
- Gustavo Rangel
Brazil: Fiscal and inflation risks escalate
Stronger-than-expected activity indicators and the growing investor focus on inflation and fiscal risks are among the factors that have helped consolidate the view that, even though Brazil's central bank did not close the door to additional rate cuts, the policy rate should remain stable at 2% in the foreseeable future
- Gustavo Rangel
LATAM FX Talking: FX gains amid tentative rise in risk appetite
LATAM currencies had mostly failed to benefit from the USD weakening that intensified in July but, judging by the more constructive trends seen in the currencies most affected by the March sell-off, ie, the MXN, the COP and the BRL, risk appetite for the more vulnerable LATAM assets appears to be gradually returning.
- Gustavo Rangel
Mexico's cautious policy stimulus
Mexico's central bank should extend the monetary easing this week, with another 50bp cut, and, given the recent rise in inflation, adopt a cautious guidance. Even though Mexico's policy stance is far tighter than that of its regional peers, Banxico should interrupt its easing cycle soon, possibly after one last 50bp cut, to 4.0%, in its September meeting
- Gustavo Rangel
LATAM FX Talking/Post-Covid challenges weigh on sentiment
LATAM currencies have been under pressure, underperforming EM FX generally and, somewhat surprisingly, failing to rally amid USD weakness. That performance is, however, comparable to FX trends seen in the more fragile EM economies. LATAM FX appears weighed down by negative investor sentiment towards the region, which is often considered the “new epicentre†in the Covid outbreak. Moreover, the economic impact of the pandemic is likely to exacerbate the region's existing macro fragilities. The...
- Gustavo Rangel
Brazil: Signs of a faster recovery emerge
When compared to its LATAM peers, recent data in Brazil suggest a relatively shallower recession is under way. Central bank officials have also sounded optimistic, but that has yet to translate into a firm resolve to end the rate-cutting cycle. In fact, lower-than-expected inflation increased the risk of a deeper easing cycle, weighing on the BRL
- Gustavo Rangel
- Nicky Mapa
- Prakash Sakpal
- Trieu Pham
- Valentin Tataru
- Gustavo Rangel
LATAM FX Talking/Reaching the limit of rate cuts
A preoccupation with stability in local financial markets, especially FX, is now driving the monetary policy decisions of several countries in LATAM. Apart from Mexico, which has traditionally weighed FX considerations heavily in its reaction function, central banks in Colombia and Brazil are also now highlighting the risk of financial market instability, possibly driven by FX outflows, if rates drop much lower than they are now.
- Chris Turner
- Dmitry Dolgin
- Francesco Pesole
- Gustavo Rangel
- Iris Pang
- Jakub Seidler
- Muhammet Mercan
- Nicky Mapa
- Peter Virovacz
- Petr Krpata
- CFA
- Prakash Sakpal
- Rafal Benecki
- Rob Carnell
- Valentin Tataru
FX Talking/Keeping the (bullish) faith
Despite many opportunities to do so, risk assets have so far avoided the kind of sharp re-alignment with Main Street that so many commentators expect. No doubt this is driven by expectations that policymakers have a light trigger-finger for fresh stimulus. Whether risk assets can survive any fresh lockdowns remains to be seen, but we continue to see risk supported on dips, US$ sold on rallies. Executive summary - FX markets are trading more in line with equity than debt markets. Or perhaps one c...
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