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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
EMERGING MARKETS
- Emerging market liquidity appears to have peaked in mid February as negative macro sentiment weighed on riskier EM assets over the past two months or so.
- Firstly, the rise in the USD amid the strong divergence in growth expectations between the US and the Rest of the World have been driving EM equities to the downside.
Source: Bloomberg/MNI
- In addition, rising political and economic in Turkey , Brazil and Russia have kept their exchange rates weak in the past year despite the 10% + depreciation in the greenback since its high reached in the middle of the March 2020 panic.
- The significant divergence in vaccination campaigns was also going to be a strong factor influencing both currencies and risky assets such as equities in 2021. Even though the pace of the vaccine rollout has accelerated in some EM countries in recent weeks (i.e. CEE region), it is still running slow in other important regions, namely Russia and Mexico.
- The tightening conditions in China, with the annual change in Total Social Financing dropping sharply in March, could also weigh on EM risky assets in the near to medium term.
Source: Bloomberg/MNI
- Hence, the chart below shows the interesting divergence between US and EM equities; while the SP500 continues to reach new all-time highs in the current 'risk-on' environment, EM equities keep retracing lower with the EEM ETF currently testing its 100D SMA support; a break below that level would open the door for a move down to 51.50.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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