The Federal Reserve held off hiking interest rates 
Interest rates: Monetary policy is always political as central banks opt to back the financial sector 
Why the Bank of England is now more upbeat than the IMF 
The politics stopping the UK from opening a youth mobility scheme with Europe 
The Federal Reserve and the art of navigating a soft landing ... when economic data sends mixed signals 
Governments have been able to overrule the Reserve Bank for 80 years. Why stop now? 
Bank of England interest rate rise: why this could be the last increase for a while 
History for sale: what does South Africa’s struggle heritage mean after 30 years of democracy? 
Will the RBA raise rates again? Unless prices surge over summer, it's looking less likely 
Think the RBA will lift rates on Melbourne Cup day? Don't bet your house on it 
What kind of diner are you? 6 types of diners who avoid plant-based meat dishes 
The focused and concise emphasis the weekly one-stop shop for EM assets (FX, bonds/swaps, sovereign credit).
It provides near term standpoints on FX and across a range of maturity buckets for swaps, bonds and sovereign credit in a user-friendly heat map layout. A short commentary section links our top-down views and trade ideas with key market events.
In FX, we continue to like carry trades but selective long dollar risk against low yielders. In local currency bonds and swaps we have a slightly bearish view (i.e. rates higher) but in certain countries such as Russia, South Africa, and Turkey a constructive stance.
In sovereign credit, our views are more mixed, with our highest conviction overweight being Turkey and our highest conviction underweight the Philippines.
Key events this week in EM
Banxico (Mar 30): Consensus expects 25bp but more people look for 50bp than no change (the expectations are about 50bp). The urgency for aggressive tightening has diminished with the peso recovering. A 25bp hike could be more market friendly, but a bigger hike is unlikely to alter the peso’s positive dynamics.
MNB (Mar 28): We expect a dovish signal via a reduction in the cap for the 3-month deposit facility. This would counteract hawkish interpretations from an increase in inflation forecasts.
SARB (Mar 30): No change in policy expected. The surging ZAR keeps inflation in check and reduces the need for a policy response and keeps local asset attractive. Though on a relative value basis we prefer the RUB over the ZAR.
Growth: Turkey GDP (Mar 31) to recover but stay depressed, while China PMI (Mar 31) to be supported by steady credit growth.
EM Trade Tips:
The new weekly also has a page that summarizes our trade ideas in EM FX and rates with a short description of whether we would add/hold/reduce exposure.
The below four trade idea describe distinctive perspectives of i) parameters, ii) thesis, iii) key levels & strategy, and iv) what to watch.
This week we focused on short SGD-INR in FX and long a high yielding basket against the EUR in FX space (carry is still king when fundamentals are improving), receiving front-end Hungarian rates (MNB to maintain a dovish bias), and overweight Turkey in sovereign credit (market factoring in too large a downgrade).
