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Monetary

Brazil: Stuck Between A Rock And A Hard Place

Brazilian policymakers are stuck between a rock and a hard place. There is no combination of fiscal and monetary policies that can assure decent growth, on-target inflation, a stable exchange rate, and public debt sustainability. We recommend investors maintain an underweight allocation to Brazilian fixed-income markets versus their EM peers and continue shorting BRL versus MXN. We have been bearish on the Bovespa in absolute terms and are now downgrading Brazilian stocks from neutral to underweight within an EM equity portfolio.

Emerging Markets Strategy by Juan Egana, Arthur Budaghyan
Turkey: Don’t Buy The Dip
After a period of relative stability and progress towards policy orthodoxy, politics are again haunting Turkish assets. President Erdogan jailed Istanbul mayor Ekrem Imamoglu, a political rival from the opposition party gaining ground at the municipal level.…
Daily Insights by Felix-Antoine Vezina-Poirier
BoE Holds, Signals Slower Easing Ahead
The Bank of England held its policy rate at 4.5%, with only one MPC member dissenting to cut 25 bps. The BoE signaled a slower pace of easing, as inflation remains elevated while global growth becomes increasingly uncertain. Like other DM central banks,…
Daily Insights by Felix-Antoine Vezina-Poirier
South Africa: The Coalition Government Honeymoon Is Over

The South African government seems to believe that some fiscal retrenchment can stabilize the public debt-to-GDP ratio. But that’s a misconception. The country will need draconian spending cuts to achieve this.

Emerging Markets Strategy by Rajeeb Pramanik
BoJ Holds, Remains On Watch For Global Headwinds
The Bank of Japan left rates unchanged at 0.50%, but maintained a hawkish bias, making it the only G10 central bank in a hiking cycle, as the hot labor market creates sustained domestic price pressures.  More rate increases are likely this year as…
Daily Insights by Felix-Antoine Vezina-Poirier
The Fed Remains In Wait-And-See Mode
The Federal Reserve held rates at 4.25%-to-4.5% as expected, and slowed down the pace of quantitative tightening. The FOMC remains comfortable waiting and assessing the impact of recent and upcoming policy changes. The dots reflected a more stagflationary…
Daily Insights by Felix-Antoine Vezina-Poirier
Analysis Paralysis

The market reaction to this afternoon’s Fed meeting looks overdone. Investors could be in for a hawkish surprise when it becomes apparent that the Fed won’t ease policy into higher tariff-driven inflation prints.

US Bond Strategy by Ryan Swift
Rising Inflation Expectations Will Keep The Fed On The Sidelines
The preliminary March University of Michigan Consumer Sentiment Index missed estimates, falling to 57.9 from 64.7. The decrease came from both the assessment of current conditions and expectations, with the latter falling almost 10 points. Measures of 1-year…
Daily Insights by Felix-Antoine Vezina-Poirier
Cool PPI Points To Hotter PCE
The February US Producer Price Index came in below estimates, with the headline measure showing no monthly change and standing at 3.2% y/y. Core PPI (excluding food, energy, and trade services) was also cooler than expected, coming in at 0.2% m/m (3.3%…
Daily Insights by Felix-Antoine Vezina-Poirier
BoC: Focus On Inflation Expectations
The Bank of Canada cut by 25 bps to 2.75% as expected. This seventh consecutive cut brings the policy rate further into neutral territory, estimated to be in the 2.25%-to-3.25% range. The BoC is in a tough place. The trade war will ultimately be…
Daily Insights by Felix-Antoine Vezina-Poirier

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