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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
- In the past 8 months. momentum in EM equities has been bearish with MXEF index constantly reaching lower highs.
- The constant downward revision in growth expectations (China and other Asian economies at first) in addition to the contraction in Chinese liquidity (TSF 12M Sum) and more recently the rising Covid uncertainty have been the major factors behind the weakness in EM currencies and risky assets.
- Historically, rising uncertainty has been associated with a surge in the US Dollar and weakness in EM equities; the chart below shows the strong co-movement between the USD index (inverted) and MXEF index over time.
- Interestingly, the magnitude of the move on EM equities was moderate despite the drastic increase in the US Dollar.
- Hence, EM risky assets seem vulnerable in the short term as demand for 'safe' assets continues to rise.
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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