Saturday, October 3, 2015

The days of malaise - TDS

FXStreet (Guatemala) - Analysts at TD Securities explained the mixed market conditions.

Key Quotes:

"Fundamentals are alive and well in rates markets, where we have seen the steady deterioration of data and steady decline in rates.

And while DM data has weakened, EM data has been even worse, which is the real reason EMFX has weakened, not the Fed.

The one place not playing ball with fundamental trends is the dollar, which sets it up in our opinion for the risk of a 5% decline by year-end.

Interestingly, though, this is the most inversely correlated data surprises have been across countries in over a decade—so upside in one economy is implying downside in another—perhaps a worrying sign of impotent monetary policy and FX moves that serve only to beggar thy neighbor.

We have been bearish EM for two years, and structural adjustment is not done. But eventually, when growth turns after the Fed has pushed rate expectations out and the ECB and others are increasing easing, long EM is likely the place to be. The waiting game is still on, however, for that turn in the data."
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