Some dovish signals from the Fed and a bounce in
helped EM end last week on a firm note. This week, the US
retail sales report
could be important, and the same goes for
data too. The Fed’s Dudley, Kaplan, Harker, Williams, Lacker, Lockhart, Powell, and Evans all speak this week. The Fed releases its
on Wednesday for the upcoming FOMC meeting April 27. Within specific EM countries, risks remain in place. We continue to feel that markets are too optimistic regarding the impeachment process in Brazil.
China reports March
Monday. The former is expected at 2.4% y/y and the latter at -4.6% y/y. It then reports March
expected at 9.3% y/y and
at -10% y/y. China reports March
as well as
Friday. For now, we think China is neutral to positive for market sentiment.
The Czech Republic reports March
Monday, which is expected to rise 0.4% y/y vs. 0.5% in February. However, both
reported lower than expected March inflation, and so we see downside risks to the Czech data. No wonder the central bank extended its forward guidance last month to maintain current policies until “near” mid-2017 vs. H1 2017 previously.
Taiwan reports March
are expected at -9.8% y/y and
at -15.6% y/y. Export orders have remained weak, suggesting a poor export performance over the next six months. The central bank should continue to cut rates each quarter to help stimulate the economy.
Monday, which is expected to rise 1.3% y/y vs. 1.1% in January. The economy is a bit sluggish even as price pressures are likely to remain low. For now, we see no further Banxico tightening this year. Next policy meeting is May 5, no action seen then.
Tuesday. The former is expected to rise 5% y/y while the latter is expected to rise 1% y/y. The RBI issued a fairly dovish statement after its recent 25 bp cut, hinting that it is looking for further room to ease. If CPI continues to fall, another cut at the next RBI meeting June 7 is possible.
Brazil reports February
Tuesday, which are expected at -8.5% y/y vs. -10.3% in January. The economy continues to contract, and easing price pressures are leading many to look for an easing cycle this year. We do not see a cut in H1, but perhaps H2 is possible if the currency stabilizes and the political outlook clears up.
Chile’s central bank meets Tuesday and is expected to keep rates steady at 3.5%.
eased to 4.5% y/y in March. While still above the 2-4% target range, it has fallen for two straight months. The economy remains very weak, and so we think the bank will try to avoid further tightening if the current inflation trajectory continues.
South Africa reports February
Wednesday, which are expected to rise 2.7% y/y vs. 3.1% in January. The economy remains sluggish even as price pressures remain too high. The SARB next meets May 19. We think the decision then will largely depend on how the
is trading, since the bank has stressed its concerns about the inflationary pass-through.
Hungary's central bank releases minutes from its March meeting last Wednesday. At that time, it surprised the markets with a 15 bp cut to 1.2%. The next meeting is April 26, and another 15 bp cut to 1.05% is expected.
came in lower than expected at -0.2% y/y, the first deflationary reading since September. Indeed, with deflation risks back in play, we think Hungary will continue cutting rates into mid-year.
Thursday, which is expected to rise 1.6% y/y vs. 1.8% in Q4. The MAS typically meets on the same day. At the last meeting in October, the MAS eased policy slightly by reducing the slope of its S$NEER trading band. Deflation risks persist even as the economy is slowing, and so the MAS should ease again this month with another adjustment to the S$NEER band. Singapore reports February
Colombia reports February
Thursday. The former is expected to rise 2.7% and latter to rise 7.0% y/y. After March came in higher than expected at 8% y/y, the central bank is likely to continue hiking rates with another 25 bp hike to 6.75% at the next policy meeting April 29.
Peru's central bank meets Thursday and is expected to keep rates steady at 4.25%. CPI inflation eased to 4.3% y/y in March. While still above the 1-3% target range, it has fallen two straight months. Political risks are rising a bit as a runoff vote on June 5 will be needed in the presidential election. Keiko Fujimori won the most votes in the first round but fell short of the 50% needed to avoid a runoff.
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