Podcast by Joe Weisenthal & Tracy Alloway, Odd Lots

Odd Lots

Podcast by Joe Weisenthal & Tracy Alloway

Bloomberg's Joe Weisenthal and Tracy Alloway explore the most interesting topics in finance, markets and economics. Join the conversation every Monday and Thursday.

Cross Asset Strategy

<ul><li>The hosts discuss the long-standing concern over the risk of conflict between China and Taiwan, which has been a topic of speculation for many years.</li><li>They note that recent events, such as the tensions between Russia and Ukraine and the Israel-Hamas conflict, have heightened concerns about the prospect of a hot conflict in the future.</li><li>The importance of Taiwan's economy and its role in global supply chains, particularly in the semiconductor industry, has made the potential disruption of these supply chains a major concern for the world. This, in turn, may give China more incentive to assert its position on the Taiwan issue.</li></ul>This podcast is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only.

The hosts discuss the long-standing concern over the risk of conflict between China and Taiwan, which has been a topic of speculation for many years.They note that recent events, such as the tensions between Russia and Ukraine and the Israel-Hamas conflict, have heightened concerns about the prospect of a hot conflict in the future.The importance of Taiwan's economy and its role in global supply chains, particularly in the semiconductor industry, has made the potential disruption of these supply chains a major concern for the world. This, in turn, may give China more incentive to assert its position on the Taiwan issue.This podcast is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only.

The Massive Economic Impact If China Invades Taiwan

Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

<ul>
<li>With the Brazilian central bank approaching the end of its aggressive monetary tightening cycle, the rate curve has taken a unique shape that features a hump and a kink.</li>
<li>The hump should get more pronounced because the rate-cutting cycle should be deeper than currently priced because real rates are quite elevated and growth risks are high.</li>
<li>The kink should also get more prominent as the curve should steepen further out due to fiscal risks irrespective of who wins the upcoming presidential election.</li>
</ul>


With the Brazilian central bank approaching the end of its aggressive monetary tightening cycle, the rate curve has taken a unique shape that features a hump and a kink.
The hump should get more pronounced because the rate-cutting cycle should be deeper than currently priced because real rates are quite elevated and growth risks are high.
The kink should also get more prominent as the curve should steepen further out due to fiscal risks irrespective of who wins the upcoming presidential election.


The Hump and Kink in Brazil’s Yield Curve to Become More Pronounced

Russia's monetary policy decision tomorrow is a close call with consensus expectations of a 50 bp hike. I expect a smaller 25 bp rate hike but with hawkish messaging. Although inflation increased sharply in September, it was driven primarily by food prices. In the face of rising economic uncertainty due to new restrictions with daily coronavirus cases reaching the highest level, CBR should be cautious in tightening monetary policy. Moreover, the previous rate hikes and the recent currency strengthening should have a disinflationary impact with a lag. If the CBR moves as I expect, it should be supportive of my 2s5s steepener recommendation.Separately, the attached file is a snapshot of the EM 10y rates market in which I seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

Russia's monetary policy decision tomorrow is a close call with consensus expectations of a 50 bp hike. I expect a smaller 25 bp rate hike but with hawkish messaging. Although inflation increased sharply in September, it was driven primarily by food prices. In the face of rising economic uncertainty due to new restrictions with daily coronavirus cases reaching the highest level, CBR should be cautious in tightening monetary policy. Moreover, the previous rate hikes and the recent currency strengthening should have a disinflationary impact with a lag. If the CBR moves as I expect, it should be supportive of my 2s5s steepener recommendation.Separately, the attached file is a snapshot of the EM 10y rates market in which I seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

Rates 10y Dashboard: Russia to Deliver a Small Rate Hike Supporting the Steepener Recommendation

With the US 10y yield and 5y5y forward inflation expectations rising, the correlation of EM rates with the US has risen sharply. We discuss the reasons behind this along with what it means for EM rates going forward and the strategy to pursue.Separately, the attached file is a snapshot of the EM 10y rates market in which we seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

With the US 10y yield and 5y5y forward inflation expectations rising, the correlation of EM rates with the US has risen sharply. We discuss the reasons behind this along with what it means for EM rates going forward and the strategy to pursue.Separately, the attached file is a snapshot of the EM 10y rates market in which we seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

Rates 10y Dashboard: Correlation of EM Rates with the US Rises Sharply

The rates curve in Brazil has been flattening on a combination of aggressive monetary tightening by the central bank and lowering of the risk premium on a better-than-expected fiscal performance. Given the risks ahead, primarily the rise in political uncertainty heading into next year's presidential election and the likely fiscal slippage, a curve steepener in Brazil offers an attractive entry point to express a bearish view. A low-risk approach to express the same view is via a butterfly.Separately, the attached file is a snapshot of the EM 10y rates market in which we seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

The rates curve in Brazil has been flattening on a combination of aggressive monetary tightening by the central bank and lowering of the risk premium on a better-than-expected fiscal performance. Given the risks ahead, primarily the rise in political uncertainty heading into next year's presidential election and the likely fiscal slippage, a curve steepener in Brazil offers an attractive entry point to express a bearish view. A low-risk approach to express the same view is via a butterfly.Separately, the attached file is a snapshot of the EM 10y rates market in which we seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

Rates 10y Dashboard: Does the Curve Flattening in Brazil Offer an Opportunity?

Taiwan

A vanilla interest rate swap us an agreement between two counterparties to exchange cashflows (fixed vs floating) in the same currency. This agreement is often used by counterparties to change their fixed cashflows to floating or vice versa. The payments are made during the life of the swap in the frequency that is pre-established by the counterparties.

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The Massive Economic Impact If China Invades Taiwan

In this podcast episode, the hosts introduce themselves, discuss the recurring risk between China and Taiwan, acknowledge their past incorrect...

Odd Lots

The Hump and Kink in Brazil’s Yield Curve to Become More Pronounced

I expect the hump and kink in Brazil's rate curve to get more pronounced as a deeper rate-cutting cycle should get priced in and the curve should...

Gautam Jain, PhD, CFA

Rates 10y Dashboard: Russia to Deliver a Small Rate Hike Supporting the Steepener Recommendation

Despite high inflation, Russia should raise the policy rate by less than consensus due to new restrictions as Covid cases have risen sharply. This...

Gautam Jain, PhD, CFA

Rates 10y Dashboard: Correlation of EM Rates with the US Rises Sharply

We discuss the reasons behind the sharp rise in the correlation of EM rates with the US along with what it means for EM rates going forward and the...

Gautam Jain, PhD, CFA

Rates 10y Dashboard: Does the Curve Flattening in Brazil Offer an Opportunity?

With political uncertainty and fiscal slippage likely to rise heading into next year's presidential election, a curve steepener in Brazil offers an...

Gautam Jain, PhD, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)