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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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Free AccessMorgan Stanley Turns Bearish On EM
- The rise in uncertainty over the Delta variant combined with the beginning of the US monetary policy normalization could continue to support the US Dollar (against EM currencies) according to Morgan Stanley analysts.
- The recent flattening of the US 2Y10Y yield curve relative to its DXY peers in the past few weeks suggest that the US Dollar may have bottomed; in the past 15 years, periods of flattening US yield yield curve relative to DXY-weighted peers have been associated with USD strength.
- Even though a lot EM countries have made progress on reopening their economies, which therefore should boost growth expectations to the upside in the medium term, the uncertainty over the economic recovery remains very elevated.
- With the percentage of fully vaccinated people still very low in some EM economies, government will certainly have to increase the restrictions in the coming months if cases suddenly start to surge, which would therefore generate demand for traditional 'safe' assets such as the US Dollar.
- MS analysts suggest to engage long USD exposure through COP, MXN and ZAR, while removing their long SAGB 2048 and short EUR/PLN positions and maintain CZK flatteners.
- In Asia, MS take profit on/close most of their carry trades and recommend bearish trades including long SGD/IDR, long SGD/CNH, pay 5yr CNY NDIRS, pay 5yr INR NDOIS and receive 1y1y in KRW.
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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.