Emerging Markets Cross-Asset Strategist, Emvest Partners

Guillaume Coutant

Emerging Markets Cross-Asset Strategist

Cross-Asset Emerging Markets Technical Research

Emvest Partners

Emvest Partners is the leading independent French financial analyst specializing in Emerging Markets for  Asset Managers, Hedge Funds and Family Offices. The studies provided by Emvest Partners are based on a top-down, cross-asset and relative-value approach of the financial markets. The articulation of macroeconomic analysis and technical analysis improves the consistency of the recommendations, the mitigation of risks of error and a significant improvement in performance.

Thematic (Sector/Industry)

<h2>1.     TRY swap curve bearish steepening expected:</h2><ul><li>TRY swaps have not reached their top yet, and are expected to be paid.</li><li>The 1-5y curve is expected to steepen towards -90/-40bps. Highlight put on 5y TRY swap.</li></ul><h2>2.     TRY is now back on intervention levels to resume its weakness with a higher volatility:</h2><ul><li>The TRY depreciation sequence started in 2011 is not over and now on intervention levels.</li><li>Volatilities are also back on support levels for a significant pick-up.</li><li>EURUSD bullish outlook stands, EURTRY gives the highest potential.</li><li>TRYZAR bearish sequence started in 2016 still has room for further drop.</li></ul><h2>3.     Mitigating factors :</h2><ul><li>Global EM sentiment which remains positive.</li><li>USD mitigated outlook prevents, for now, from a clear EM underperformance.</li></ul><p><strong>RECOMMANDATION</strong></p><p>TIME HORIZON: 3 months                              CONVICTION:  excellent</p><p> </p><h2>              Payer TRY swap 5y (TYUSSW5) towards 13.00/13.40%.</h2><h2>              Bullish TRYBASK, EURTRY, USDTRY with a 7/11% rise potential.</h2><h2>              Bearish TRYZAR towards 3.00/2.85.</h2>

1.     TRY swap curve bearish steepening expected:TRY swaps have not reached their top yet, and are expected to be paid.The 1-5y curve is expected to steepen towards -90/-40bps. Highlight put on 5y TRY swap.2.     TRY is now back on intervention levels to resume its weakness with a higher volatility:The TRY depreciation sequence started in 2011 is not over and now on intervention levels.Volatilities are also back on support levels for a significant pick-up.EURUSD bullish outlook stands, EURTRY gives the highest potential.TRYZAR bearish sequence started in 2016 still has room for further drop.3.     Mitigating factors :Global EM sentiment which remains positive.USD mitigated outlook prevents, for now, from a clear EM underperformance.RECOMMANDATIONTIME HORIZON: 3 months                              CONVICTION:  excellent               Payer TRY swap 5y (TYUSSW5) towards 13.00/13.40%.              Bullish TRYBASK, EURTRY, USDTRY with a 7/11% rise potential.              Bearish TRYZAR towards 3.00/2.85.

Turkey : New Bearish Sequence