We have been overweight Mexican sovereign credit and local currency bonds as well as equities relative to the respective EM benchmarks. Our rationale for this stance has been the fact that Mexico’s macro risk premium relative to…
Mexican equities and European bank stocks have been trading in close tandem, indicating that common shocks are driving them both. For now, each of those markets continue to trade at very depressed levels. Funding stresses…
Highlights Bear markets occur in phases, and their narrative can mutate. What began as a selloff caused by the coronavirus outbreak could well mutate into an oil crash-led selloff, and then mutate again into a selloff due to policy…
Since the summer of 2019, the Mexican central bank has cut interest rates from 8.25% to 7%. The Mexican economy remains weak, therefore, our emerging market strategist expects Banxico to cut rates to 6%, maybe even lower.…
Pieces are falling into place for Mexican stocks to outperform the EM equity benchmark on a sustainable basis, for the following reasons: First, long-lasting outperformance by Mexican local currency bonds and corporate credit…
Analysis on Mexico and Central Europe is available on pages 6 and 10, respectively. Highlights Deflationary pressures have been intensifying in Malaysia and the central bank will be forced to cut its policy rate. To play this theme,…
Mexican local currency bonds, as well as sovereign and corporate credit, have been one of our highest conviction overweights for some time. These positions have played out very well (Chart II-1). Presently, pieces are falling…
Highlights The lingering global manufacturing recession and the substantial drop in U.S. bond yields have been behind the decoupling between both EM stocks and the S&P 500, and cyclical and defensive equities. Neither the most…
The Mexican economy is heading into a full-blown recession. Most segments of the economy are in contraction, and leading indicators point to further downside. Both manufacturing and non-manufacturing PMIs are well below 50 (Chart II-1…