We’ve taken a massive WIN in recent weeks, but the markets are precarious here after blood on the street as seasonality shifts. Is there a final surge before the impending collapse?
EM by EM #23 Playing the least dirty laundry vs the dirtiest
When things seem to be spiraling downwards, trades that capitalize on relative weakness often present favorable risk-to-reward opportunities. We’ve recently entered such a trade ourselves
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Positioning Watch: Higher for longer vs Lower for longer?
The Fed projects higher rates for longer, while oil production cuts persist. How do markets play the “Higher for longer and Lower for longer” ? Read our weekly report below
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Something for your Espresso: Is the stabilization in Asian FX sustainable?
Rhetorical intervention in JPY and CNY helped risk assets and high beta stocks perform yesterday, but is the stabilization sustainable or still fundamentally challenged? We lean towards the latter.
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EM by EM #20 Another energy squeeze in the cards?
Emerging market central banks demonstrated their foresight in 2021, acting ahead of the curve. However, there is a looming concern that the resurgence in energy prices might pose a challenge for them, much like it did in 2022.
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Services Week: What to buy if manufacturing rebounds while services weaken?
We have run the numbers on historical correlations between the US PMI spread and various asset classes to find out what you should buy if manufacturing rebounds while services weaken.
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EM by EM #19 The Simsek Effect kicking in?
The Turkish central bank hiked the interest rates by 750 basis points against the market expectations of 200 bp underlying this month and both stocks & lira rallied on the back of it. Where is the Turkey case heading from here? Read our view here
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EM by EM #18 – Why Jackson Hole is more important than Johannesburg
Finance Journos are busy flying this week. But what is going on with BRICS & the FED? EM’s care more about the latter this week
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Trade alert: Trading the Chinese betas and leads/lags
Will Europe be the next shoe to drop in the Chinese RE soap opera? Here is how we position for lagged spill-overs to Europe.
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Something for your Espresso: Wyoming is not only full of cowboys
How many hawks and doves will arrive in Wyoming for the Jackson Hole conference? The doves have received a perfect excuse from China and the PBoC will hope and pray that Powell announces an explicit pause, but he won’t.
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Portfolio Watch: Catching a Chinese cold?
Summer volatility razor, BoJ and Xi’s real estate malaise have all contributed to headwinds for most asset classes. We are still alive and kicking despite a few knocks and bruises. Read here for full context
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FX Nugget: Can the PBoC defy gravity? 7.30 watch
Will the PBoC defend the 7.30 handle at all costs? What does it mean for risk appetite? And how will Commodity markets be impacted? 5 nuggets on the importance of USDCNY right here!
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Positioning Watch – The Chinese disappointment is written all over the latest positioning
CPI is cooling with economic data still suggesting that we are in a Goldilocks scenario. But are markets claiming their victory too early? And will unusual optimism be the catalyst for a recession?
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EM BY EM #16 Counting coppers and rating cuts
FED & ECB near peak policy rate and UST curve seems to be steepening. Meanwhile, the Chinese are still late with their stimulus package. Where does that leave EM FX? We give our general assessment here.
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FX Watch: Everything that matters for EUR/USD is natural gas
Is the EUR resilience basically just down to a continued decline in local energy costs? Natural Gas prices have explained almost the entire volatility in the EUR since 2021 and with the tide starting to turn in energy space, it may be time to watch out in FX space as well. Here is the data!
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Positioning Watch: From Japan with Love
A lot of volatility and plenty of aspects to digest after a red week in markets. But how have positioning and sentiment moved? Read here to for our view
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EM BY EM #15 – Ecuador General Election as a catalyst?
Plenty of bets in LatAm carry trades unwound this week on the back of BoJ YCC tweak. But perhaps the LatAmsphere has a USD winner short term?
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Positioning Watch – The market’s response to another Fed hike
The central bank week is over, and that means it’s time for us to have a look at how Investors and Traders perceived the Fed meeting and how they have adjusted their portfolios in response.
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Portfolio Watch: Surfing the boomer wave
BoJ’s decision is of course the big talking point for markets this week. Our book keeps up despite some impact from Ueda’s decision- but what will it mean and how will we trade it in the coming weeks? Read our view below
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5 Things We Watch – PMIs, FX, Japan, Brazil, Inflation
This week our primary focus is the current business cycle, where we try to figure out which stage we are in, and what outlook different asset classes are pricing in. Today’s edition of ‘5 Things We Watch’ is no exception.
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FX Watch: Have FX markets sniffed out an upcoming rebound?
USD weakness paired with an uptrend in cyclical currencies sounds like the perfect rebound cocktail, but can FX markets rightfully reveal turning points in the economic cycle? Let’s have a look at the current pricing and the historical evidence.
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Positioning Watch – Preparing for (dis)inflation?
With a strong jobs report and a soft CPI print, the market is currently digesting divergent data. In the upcoming weeks, we will closely observe market positioning to interpret the implications for price action. If the inflation paradigm is shifting, how are markets prepared?
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Portfolio Watch: The Summer Volatility Razor
Volatility has been detrimental to many books this week which too is reflected in some of our positions and it appears that diversification is gaining increased significance given the resurgence of volatility. Traders who are not paying attention here will pay for it involuntarily
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Positioning Watch – Markets are blowing off the recession
Economic data keeps surprising us positively, and markets are starting to believe that a soft landing is the base case. That’s at least what positioning data is telling us.
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Portfolio Watch: A green comeback week
Follow along as we keep you updated on our live portfolio and how we view the world allocation-wise every week!
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EM BY EM #10 2021 in reverse: Will EM Central banks outsmart DM’s once again?
2021 will be remembered as a great policy error year at the FED and the ECB. But other central banks saw the inflation coming. Will they be in front of the curve again in 2023?
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Positioning Watch: War in Russia? Markets are forward-looking but never see it coming
Positioning will be KEY to watch as political risks and tensions mount. We offer our view on the data for the past week as Yevgeny Prigozhin marches on Moscow.
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FX Watch: The Scandinavian FX massacre
Norges Bank finally made a decent attempt at underpinning the NOK, but the issue is that rates don’t really matter for the NOK. They matter a bit more for the SEK, which makes a SEK long tempting ahead of next week. Is the Scandi bloodbath over?
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Positioning Watch – The soft landing narrative is scratching the surface again
With the debt ceiling deal done and yesterday’s stunning NFP numbers, the soft landing narrative seems to be back, and optimism is gaining territory in the global macro scene. See what this means for positioning across asset classes, and whether you’ve placed your eggs in the right basket.
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EM by EM #7 Is Turkey to TRY a pivot?
As the Lira is trying to outcompete the depreciation of the Venezuelan Bolivar and the volatility of dogecoin, we provide our view and assessment of the near-term impact of Erdogan’s narrow victory. Markets were not impressed by the outcome but will the skepticism remain the prevailing narrative?
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