Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

<ul>
<li>The Indonesian rupiah has outperformed most EM currencies, particularly other Asian currencies, and has done so with low volatility in contrast with the rising volatility of the EM FX index.</li>
<li>Looking ahead, headwinds may be appearing with the interest-rate differential working against the currency as the Fed starts raising rates and higher inflation leading to lower real rates.</li>
<li>While the rise in commodity prices is generating trade surpluses for now, the current account may turn negative from positive with a rise in imports accompanying the economy's reopening.</li>
</ul>


The Indonesian rupiah has outperformed most EM currencies, particularly other Asian currencies, and has done so with low volatility in contrast with the rising volatility of the EM FX index.
Looking ahead, headwinds may be appearing with the interest-rate differential working against the currency as the Fed starts raising rates and higher inflation leading to lower real rates.
While the rise in commodity prices is generating trade surpluses for now, the current account may turn negative from positive with a rise in imports accompanying the economy's reopening.


Indonesian Rupiah Shines in Volatile Times

Head of Research and Global Chief Strategist, Steno Research

Andreas Steno

Head of Research and Global Chief Strategist

Macro and Geopolitical Research House

Steno Research

Steno Research is a new macro and geopolitical research house. We are based out of Copenhagen, Denmark, but have an international team and a strong network of sources and partners around the world. The team is lead by Andreas Steno, previous global head of strategy at Nordea Bank, and Mikkel Rosenvold, former chief consultant in the Danish Ministry of Finance.

Macroeconomics

<ul><li>Welcome to our weekly EM Watch, where we examine Emerging Markets (with a particular focus on China) through the lens of Western investors.</li><li>It’s been a rough month for anything linked to China, including industrially sensitive commodities.</li><li>According to one of the most reliable live gauges of Chinese energy demand—the Singapore Gasoil-Dubai Crude Crack Swap—we are still on a slippery slope toward weaker demand from China.</li></ul>

Welcome to our weekly EM Watch, where we examine Emerging Markets (with a particular focus on China) through the lens of Western investors.It’s been a rough month for anything linked to China, including industrially sensitive commodities.According to one of the most reliable live gauges of Chinese energy demand—the Singapore Gasoil-Dubai Crude Crack Swap—we are still on a slippery slope toward weaker demand from China.

EM Watch: The Non-Feasible Return of the EM Carry Case Amidst a Global Slowdown

Cross Asset Strategy

<ul><li>After a tricky few days, we have started gaining substantial traction in our portfolio again over the past 1-2 trading days.</li><li>Risk assets seem to be stabilizing, with crypto leading a new bull wave, while metals are selling off right, left, and center alongside a turning tide in the USD versus Asian FX and Lat-Am FX overall.</li><li>Over the week, our biggest concern, given our current tilt in industrial metals, is that manufacturing rebounds faster than anticipated by many.</li></ul>

After a tricky few days, we have started gaining substantial traction in our portfolio again over the past 1-2 trading days.Risk assets seem to be stabilizing, with crypto leading a new bull wave, while metals are selling off right, left, and center alongside a turning tide in the USD versus Asian FX and Lat-Am FX overall.Over the week, our biggest concern, given our current tilt in industrial metals, is that manufacturing rebounds faster than anticipated by many.

Portfolio Watch: Here Comes the Metals Meltdown...

<ul><li>Hello everyone, and welcome back to our weekly positioning watch.</li><li>The debates about whether the US is heading for a recession are still touring the charts, as the labor market and other economic data soften back towards pre-pandemic levels.</li><li>However, while some might be uncomfortable watching the US economy slow more than anticipated, the lack of ringing alarm bells and Powell’s recent victory lap on inflation have greenlighted markets to price in a soft landing as a 95-99% probability event by now when looking across positioning data.</li></ul>

Hello everyone, and welcome back to our weekly positioning watch.The debates about whether the US is heading for a recession are still touring the charts, as the labor market and other economic data soften back towards pre-pandemic levels.However, while some might be uncomfortable watching the US economy slow more than anticipated, the lack of ringing alarm bells and Powell’s recent victory lap on inflation have greenlighted markets to price in a soft landing as a 95-99% probability event by now when looking across positioning data.

Positioning Watch – The Soft Landing Is Moving Towards a Recovery Trade

<ul><li>Welcome to our weekly EM and Metals editorial.</li><li>It’s hard not to talk about China again this week, given the importance of the metals trade for global inflation expectations.</li><li>Our live assessment of the Chinese recovery continues to paint a stalling picture in Real Estate, exemplified by the physical copper demand being on the edge of a precipice, while the pollution based metrics hint of a continued surge in industrial production into June.</li></ul>

Welcome to our weekly EM and Metals editorial.It’s hard not to talk about China again this week, given the importance of the metals trade for global inflation expectations.Our live assessment of the Chinese recovery continues to paint a stalling picture in Real Estate, exemplified by the physical copper demand being on the edge of a precipice, while the pollution based metrics hint of a continued surge in industrial production into June.

EM Watch: Is the Chinese copper demand down 40%?

Brazil

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Indonesian Rupiah Shines in Volatile Times

The Indonesian rupiah has outperformed most other EM currencies but headwinds may be appearing for the currency as the Fed starts raising rates and...

Gautam Jain, PhD, CFA

EM Watch: The Non-Feasible Return of the EM Carry Case Amidst a Global Slowdown

Welcome to our weekly EM Watch, where we examine Emerging Markets (with a particular focus on China) through the lens of Western investors. It’s...

Steno Research

Portfolio Watch: Here Comes the Metals Meltdown...

After a tricky few days, we have started gaining substantial traction in our portfolio again over the past 1-2 trading days.

Steno Research

Positioning Watch – The Soft Landing Is Moving Towards a Recovery Trade

Overall positioning and sentiment indicators are starting to diverge, though. Most indicators show continued support for risk assets in H2.

Steno Research

EM Watch: Is the Chinese copper demand down 40%?

Welcome to our weekly EM and Metals editorial. It’s hard not to talk about China again this week, given the importance of the metals trade for...

Steno Research

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