Foreign investor sentiment towards emerging markets has improved after the 18 March FOMC meeting
EM funds remain overweight duration and still favour Indonesia, but are returning to Malaysia
EM/DM yield spread to be range-bound as foreign investor...
Current investor behaviour supports EM bonds, based on SC FIRST data on EM flows and positioning
• Foreign holdings recovered in January after dipping in December; structural demand for EM continues
• Indonesia stood out as the big positive story ...
Fed will be patient but EM investors are not; outflows are channelling through more liquid bond markets
• While overall flows reflect the Fed story, relative flows show the lower oil story still captures mindshare
• Stressed markets care about e...
We met with clients across the US last week to discuss opportunities heading into 2015
• Post-OPEC, the focus was heavily on oil; moves in trade-weighted FX had less focus
• Risk addition is likely to be light into year-end; currency wars will rem...
Direction signal now neutral from negative as foreign flows to EM debt, especially oil importers, improve
• Spread signal turns positive on flows to high-yielding oil importers (INR, ZAR, TRY, IDR) plus Brazil
• October fund allocations reflect ...
Direction signal stays negative on weak demand for EM debt; EM FX weakness puts pressure on EM bonds
• Structural investors continue to favour Asia bonds; hard data supports Korea and Indonesia
• Flow rotation continues from Russia, Turkey and So...
Indonesia has been attracting unusually high inflows on a strong local story relative to valuations
• Funds moved overweight during July and August, but positioning is only a risk if fundamentals change
• EM-21 reserve build over May-July leaned a...
In the budget, the finance minister mentioned making Indian debt eligible for international settlement
• Such a move would substantially ease operational issues faced by foreigners in accessing local debt
• For international settlement to be effe...
• New allocations charts show ongoing short-covering that will continue to support Thai bonds and FX
• Direction signal back to positive: add new long 5Y THB bonds vs pay 5Y swaps
• Spread signal shifts down to neutral, supporting low-yield bonds ...
Strong marginal buying in early May slowed as global rates fell and some countries’ risk rose
• Reflecting the slowdown, the SC FIRST directional signal turns to neutral from positive
• Given dovish ECB decision, flow signals underplay the posit...
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