DM QE programs continue to expand with the Bank of England the latest to add to its planned asset purchases. Several EM central banks have also announced QE programs this year but, compared with DM, the scale is very limited. We feature our first contribution from former BCA EM strategist, Rajeeb Pramanik, on the investment implications of limited QE in EM. Sticking with the QE theme top macro strategist Dominique Dwor-Frecaut writes on why the Fed’s balance sheet expansion could disappoint this year.
Former DB EM economist Caroline Grady looks at remittance inflows in EM and identifies PHP, INR and MEX as vulnerable to falling remittance receipts.
Finally, US rates guru George Goncalves delves into the impact of foreign flows on Fed policy.
We also update our US election tracker as well as our regular COVID tracker.
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DM QE programs continue to expand with the Bank of England the latest to add to its planned asset purchases. Several EM central banks have also announced QE programs this year but, compared with DM, the scale is very limited. We feature our first contribution from former BCA EM strategist, Rajeeb Pramanik, on the investment implications of limited QE in EM. Sticking with the QE theme top macro strategist Dominique Dwor-Frecaut writes on why the Fed’s balance sheet expansion could disappoint this year.
Former DB EM economist Caroline Grady looks at remittance inflows in EM and identifies PHP, INR and MEX as vulnerable to falling remittance receipts.
We also update our US election tracker as well as our regular COVID tracker.
Enjoy!
Bilal
Are Emerging Markets Ditching The QE Bandwagon? (4 min read) Global asset purchases under Quantitative Easing (QE) could top $6 trillion in 2020, Fitch Ratings estimates – three times the previous peak in 2013. Yet, the Emerging Market (EM) countries’ purchase plans look quite small so far.
Major EM countries like China, Korea, Taiwan, India, Russia, Brazil and Mexico have announced no QE programs so far despite facing the deepest recession in recent memory.
(Rajeeb Pramanik | 18th June, 2020)
Fed Balance Sheet Expansion Could Disappoint (3 min read) Based on continued market normalization and unchanged Fed policies, reserves are headed towards $4.3tn at end-2020. This could clog banks’ balance sheets and limit their ability to lend. At the same time, the Fed is shifting its focus to the provision of credit to the nonfinancial sector and away from Large Scale Asset Purchases (LSAPs).
(Dominique Dwor-Frecaut | 18th June, 2020)
Falling Remittances Amplify EMFX Vulnerabilities (4 min read) Deteriorating C/A positions are beginning to raise concerns over currency performance in some emerging markets. Lockdowns have triggered an unprecedented decline in exports and depressed demand will mean only a partial recovery in trade once economies reopen.
(Caroline Grady | 18th June, 2020)
US Election Tracker – Trump’s Approval Ratings Stabilize After Recent Slump President Trump’s approval rating has now stabilized after the recent slump. His handling of the COVID crisis and the social unrest in the wake of George Floyd’s tragic death knocked around 4 points from his approval rating leaving it below the range of the last two years.
(Bilal Hafeez | 18th June, 2020)
Global COVID-19 Tracker – US Cases Up Again / Germany Ban Events In the DM world, we see Sweden leading with a 2% increase in cases, most probably as a result of the recent outbreak in the northern part of the country which triggered new lockdown measures. Next, we have US with a 1% increase, the worst numbers being in Florida, Texas, and Arizona given record case surges, averaging 2600 per day, earlier this week.
(Bilal Hafeez, Stefan Posea | 18th June, 2020)
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)