By Eric Fine, Portfolio Manager, VanEck
China cash squeeze continues. Chinese authorities remain focused on risks around speculation, and are continuing their liquidity crunch. Overnight interbank borrowing rose 29bp to 3.34% today, a level last seen in March 2016. This rate was 0.6% at the beginning of January, and it is now higher than the yield of Chinese 10-year bonds. Nonetheless, we see this as mature and confident policy, employing a variety of tailored tools. Overall market calm (other than the stock-that-shall-not-be-named) seems to validate that angle. Nonetheless, this remains a trend to watch.
Turkey’s December trade balance better than expected. Turkey’s December trade deficit came in at $4.53bn, a smidgen better than the expected $4.60bn, and an improvement from November’s $5.03bn. This could be interpreted as fruit borne by the central bank’s hawkish policy U-turn, and the Turkish lira seemed to agree; the lira continues to trade well and is among the stro
By Natalia Gurushina, Chief Economist, Emerging Markets Fixed Income Strategy, VanEck
EM inflation drumbeat is not yet very strong, despite local risks and the louder chatter in DM. Brazil’s industrial production is recovering, but the pace of the emergency aid withdrawal will be key in many respects.
Inflation is one of today’s big stories, supported by renewed hopes for the U.S. stimulus (especially after the weak labor report), rising market-based inflation expectations in Developed Markets (DM) (see chart below), and the chatter about higher oil prices.
In our part of the world (Emerging Markets [EM]), the inflation landscape is still very mixed. Some countries are clearly “re-heating” – Russia, Turkey, Chile, and the Philippines. However,
COVID-19 has changed the landscape for emerging markets, injecting a broad new dimension of pandemic-related economic uncertainty, writes Eaton Vance’s Michael Cirami.
By Tom Arnold
LONDON, Nov 30 – Ivory Coast, Ghana and Kenya may all tap international debt markets in 2021, Fitch Ratings said, as investor sentiment towards the region improves after the former’s recent 1 billion euros ($1.2 billion) issue.
But weaker-rated nations in sub-Saharan Africa may still face higher funding costs than before the coronavirus pandemic, which could discourage their return to markets, Fitch said in a report released on Monday.
Ivory Coast’s Eurobond, which was five times oversubscribed last week, was sub-Saharan Africa’s first of the pandemic era and underlined a recovery in investor confidence in a region that has lagged others in returning to the markets after the shock.
Investors, businesses look towards macro-economic stability in 2021
The completion of the December 7 general elections which has seen incumbent President Nana Akufo-Addo re-elected for a second four year term in office, was supposed to be a cause for celebration for the business community which has tacitly supported the macro-economic policies of the incumbent administration , if not the government itself. But the political log jam confronting the country following the refusal of the opposition National Democratic Congress to accept the result, plus the real prospect of a hung Parliament is taking a lot of the shine off the elections. All this however will not have a major impact how their operating environment can be expected to evolve in 2021.