Trade / BOP

Highlights With a vaccine already rolling out in the UK and soon in the US, investors have reason to be optimistic about next year. Government bond yields are rising, cyclical equities are outperforming defensives, international stocks hinting at…

Highlights In the first nine months of 2020, China's capital outflows, measured by the Balance of Payments (BoP) data, have been the largest since 2016. Unlike 2016, the outflows are mainly driven by a strategic accumulation of foreign currency (FX)…

Highlights The US saves too much to achieve full employment but not enough to close the current account deficit. According to the “Swan diagram,” a weaker dollar would move the US economy closer to “external” and “internal” balance. Structural forces…

  Chart Of The WeekInvestor Consensus Is Bearish On Dollar Investor Consensus Is Bearish On Dollar…

Highlights Latin America faces a deep economic contraction and a new surge of social unrest and political unrest. However, the risks are increasingly priced into financial markets – especially if global monetary and fiscal stimulus continue. A looming…

Kenya: An Incomplete Adjustment The Kenyan shilling will depreciate by 15-20% in the next 12 months. The downward pressure on the currency stems from the country’s sizeable current account deficit. In addition, Kenya needs lower local interest rates and a…

Highlights EM domestic fundamentals, global trade and commodities prices, as well as global financial market themes are the main drivers of EM financial assets and currencies. The positive effect of improving global growth and rising commodity prices on…

Highlights President Trump is making a comeback in our quantitative election model. An upgrade from our 35% odds of a Trump win is on the horizon, pending a fiscal relief bill.  The Fed’s pursuit of “maximum employment,” the necessities of the…

Highlights US-China relations in 2020 consist of a gentleman’s agreement to keep the Phase One trade deal in place and aggressive maneuvering in every other policy area. Stimulus is unlikely to be curtailed in the US or China yet, which means…

Highlights The stock market can apparently ignore the intensifying US-China conflict as long as massive monetary and fiscal stimulus continues. Hence the ongoing “stimulus hiccup” is a big problem. Ultimately a stimulus bill will pass, but risks are…