Head of Research, Steno Research

Emil Moller

Head of Research

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>When we last visited the Turkey case, rumors of Simsek’s potential return to office were surfacing as the markets grew increasingly restless due to the escalating economic challenges.</li>
<li>Hyperinflation reached its climax in the autumn of 2022, propelled by soaring energy prices, while the reserves at the Bank of Turkey were rapidly dwindling creating a rather destabilizing cocktail for Erdogan’s administration.</li>
<li>This was the state of the Net International Reserves on the first of June where our last Turkey piece was written.</li>
</ul>


When we last visited the Turkey case, rumors of Simsek’s potential return to office were surfacing as the markets grew increasingly restless due to the escalating economic challenges.
Hyperinflation reached its climax in the autumn of 2022, propelled by soaring energy prices, while the reserves at the Bank of Turkey were rapidly dwindling creating a rather destabilizing cocktail for Erdogan’s administration.
This was the state of the Net International Reserves on the first of June where our last Turkey piece was written.


EM by EM #19 The Simsek Effect kicking in?

Geopolitical Analyst, Steno Research, Steno Research

Mikkel Rosenvold

Geopolitical Analyst, Steno Research

<ul>
<li>We begin close to our home in Denmark, where the phenomenon of Quran burnings is once again the topic of the hour.</li>
<li>The right wing provocateur and nutjob Rasmus Paludan started the trend before he stood for the Danish Election in 2019 and since took his activites across the Sound to Sweden.</li>
<li>The burning of the Quran is obviously a huge affront to the global muslim population and was a major roadblock for Sweden’s entry into NATO.</li>
</ul>


We begin close to our home in Denmark, where the phenomenon of Quran burnings is once again the topic of the hour.
The right wing provocateur and nutjob Rasmus Paludan started the trend before he stood for the Danish Election in 2019 and since took his activites across the Sound to Sweden.
The burning of the Quran is obviously a huge affront to the global muslim population and was a major roadblock for Sweden’s entry into NATO.


Great Game: Book burnings and Ukrainian peace talks

Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

<ul>
<li>The Turkish lira has become the worst-performing currency this year as the central bank is holding the policy rate steady despite sharply accelerating inflation, leading to highly negative real rates.</li>
<li>The lira is effectively in a vicious cycle: weakening currency adds to inflationary pressures, which with the central bank on hold means real rates become more negative, hurting the currency.</li>
<li>High inflation is also weighing on the economic outlook, which combined with worsening current account and fiscal deficits and depleting international reserves, is adding to the depreciation pressure.</li>
</ul>


The Turkish lira has become the worst-performing currency this year as the central bank is holding the policy rate steady despite sharply accelerating inflation, leading to highly negative real rates.
The lira is effectively in a vicious cycle: weakening currency adds to inflationary pressures, which with the central bank on hold means real rates become more negative, hurting the currency.
High inflation is also weighing on the economic outlook, which combined with worsening current account and fiscal deficits and depleting international reserves, is adding to the depreciation pressure.


Turkish Lira Takes the Helm as the Worst-Performing EM Currency

<ul>
<li>Given the current uncertainties stemming from the Fed monetary tightening and Russia's invasion, trading opportunities are creeping up as short-term mispricing tend to occur in such environments.</li>
<li>One such opportunity could be the South African rand, which has outperformed on a year-to-date basis relative to other emerging market currencies.</li>
<li>I see headwinds for the rand: the carry is low in real terms and versus volatility, the current account is set to deteriorate, growth remains a concern and it's expensive.</li>
</ul>


Given the current uncertainties stemming from the Fed monetary tightening and Russia's invasion, trading opportunities are creeping up as short-term mispricing tend to occur in such environments.
One such opportunity could be the South African rand, which has outperformed on a year-to-date basis relative to other emerging market currencies.
I see headwinds for the rand: the carry is low in real terms and versus volatility, the current account is set to deteriorate, growth remains a concern and it's expensive.


South African Rand’s Outperformance Is Overdone

<ul>
<li>In line with my view, the US dollar remains strong, with the invasion of Ukraine by Russia providing additional safe-haven bids and putting pressure on EM currencies. </li>
<li>Among EM currencies, the worst hit are Central European currencies as the war has created headwinds to growth in the region especially due to the spike in energy prices.</li>
<li>Authorities in the eurozone and Central Europe have taken steps to mitigate the impact on their economies but the proximity to the war means that some risk premium will remain.</li>
</ul>


In line with my view, the US dollar remains strong, with the invasion of Ukraine by Russia providing additional safe-haven bids and putting pressure on EM currencies. 
Among EM currencies, the worst hit are Central European currencies as the war has created headwinds to growth in the region especially due to the spike in energy prices.
Authorities in the eurozone and Central Europe have taken steps to mitigate the impact on their economies but the proximity to the war means that some risk premium will remain.


In the Line of Fire – Impact on Central European Currencies from Russia’s Invasion

Turkey

The Turkish lira is the official currency of the Republic of Turkey. 

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EM by EM #19 The Simsek Effect kicking in?

When we last visited the Turkey case, rumors of Simsek’s potential return to office were surfacing as the markets grew increasingly restless due...

Steno Research

Great Game: Book burnings and Ukrainian peace talks

We begin close to our home in Denmark, where the phenomenon of Quran burnings is once again the topic of the hour. The right wing...

Steno Research

Turkish Lira Takes the Helm as the Worst-Performing EM Currency

The Turkish lira is effectively in a vicious cycle: weakening currency adds to inflationary pressures, which with the central bank on hold means...

Gautam Jain, PhD, CFA

South African Rand’s Outperformance Is Overdone

I see headwinds for the South African rand: the carry is not attractive in real terms or relative to volatility, the current account is set to...

Gautam Jain, PhD, CFA

In the Line of Fire – Impact on Central European Currencies from Russia’s Invasion

Russia's invasion has given another leg up to the US dollar, weighing on EM currencies, particularly in Central Europe despite the steps they have...

Gautam Jain, PhD, CFA

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