Workflow
EM Local Rates
icon
Search documents
2026 全球策略会议-全球外汇、利率及新兴市场策略展望-Global Strategy Conference 2026 — Global FX, Rates & Emerging Markets Strategy Outlook
2026-01-13 02:11
Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **Global Foreign Exchange (FX)** market and **Emerging Markets (EM)**, highlighting the performance of EM GDP growth compared to Developed Markets (DM) and the normalization of inflation trends [4][10]. Core Insights - **Economic Growth**: EM GDP growth continues to outperform DM, indicating a robust economic backdrop for emerging markets [4][10]. - **Inflation Trends**: There is an expectation of inflation normalization in the near future, which could impact monetary policy and investment strategies [4][10]. - **Currency Performance**: The report anticipates continued, shallow depreciation of the US Dollar, suggesting that peaks in the Dollar are typically followed by rapid adjustments [10][12]. - **Euro and GBP Analysis**: The Euro is approaching fair value against the Dollar, while the British Pound is seen as structurally overvalued relative to other G10 currencies, indicating potential downside risks for the Bank of England's policy rate [13][16]. - **Japanese Yen**: The Yen is characterized as a dubious funding currency, with a persistent risk premium following political changes [19][22]. - **Chinese Yuan**: The report notes that China's external surplus could lead to significant currency appreciation, reminiscent of past trends [22][24]. Additional Insights - **Fiscal Concerns**: While fiscal positions remain stretched, there are signs of improvement in the UK and increased spending in Germany, which could influence economic stability [25][27]. - **Central Bank Policies**: The report suggests a generally dovish stance from central banks compared to market pricing, indicating potential for more accommodative monetary policies [28][30]. - **Emerging Market Equities**: Expectations for solid returns in EM equities are driven by improving earnings, with a target for the MSCI EM index set at 1600 by the end of 2026 [37][39]. - **Cyclical Currencies**: The report identifies ZAR, CLP, and KRW as favored long positions within the EM FX space, supported by a benign global outlook [40][41]. - **Election Volatility**: Increased volatility in EM currencies is anticipated around election periods, which could affect investment strategies [44][46]. - **Local Rates**: Divergent paths for EM central banks are expected in 2026, with some nearing the end of easing cycles while others have yet to begin [48][51]. Conclusion - The report provides a comprehensive outlook on the global FX market and emerging economies, emphasizing the importance of monitoring inflation trends, currency valuations, and central bank policies to identify potential investment opportunities and risks in 2026 [4][10][37].
EM Local Rates_ Mixed Blessings From Tariff Relief
2025-05-20 12:06
Summary of EM Local Rates Conference Call Industry Overview - The discussion revolves around Emerging Market (EM) local rates, particularly in the context of recent tariff relief between the US and China, which has impacted global growth expectations and risk assets [3][5]. Key Points and Arguments Tariff Relief and Market Impact - Positive US-China tariff news has significantly relieved risks to global growth, leading to a more challenging environment for EM local rates as recovery in global growth expectations may temper recent rallies [3][5]. - The recent outperformance of EM local rates, particularly in high-yielders, is expected to face challenges as market pricing stabilizes [4][5]. Economic Forecasts and Rate Expectations - Economists have upgraded growth forecasts for China and regional Asia, alongside increased US growth expectations and reduced recession probabilities [5]. - The Federal Reserve's rate expectations have been pushed out, with a revised higher terminal rate forecast for the European Central Bank (ECB) [5]. Risks and Sensitivities - Low-yielding markets such as Korea, Czechia, Chile, and Poland are identified as more sensitive to potential pressures from US back-end rates, while high-yielders may benefit from pro-cyclical sensitivities [3][16]. - The potential for smaller spillovers from US-specific risks is noted, suggesting that if US rates rise due to inflation concerns, it could represent a greater headwind for EM rates [16]. Recommendations and Positioning - The company has closed its front-end receiver recommendations in India and Korea, indicating a shift in strategy as downside risks to global growth have diminished [3][9]. - There is a belief that the long-end of the curve in high-yielders like Mexico, Hungary, South Africa, and Indonesia may experience flattening due to better cyclical repricing [12]. Market Dynamics - The report highlights that while EM local rates may face consolidation, positive catalysts such as lower commodity prices, a weaker US Dollar, and improving local flow conditions could sustain outperformance relative to US rates [5][12]. - The long-end flattening in high-yielders is attributed to reduced political uncertainty and potential positive surprises from upcoming budget announcements [12]. Additional Important Insights - The report emphasizes the need for caution as the market's rapid repricing may leave it vulnerable to disappointments in incoming data [5]. - The analysis includes a detailed examination of the sensitivities of EM local rates to US economic conditions, indicating a complex interplay between global and local factors [16][18]. This summary encapsulates the critical insights from the conference call regarding the current state and outlook of EM local rates, highlighting both opportunities and risks in the evolving market landscape.