Read our market review and find out all about our theme of the week in MyStratWeekly and its podcast with our experts Axel Botte, Aline Goupil-Raguénès and Zouhoure Bousbih.

Listen to Zouhoure Bousbih’s podcast (in French only)

Topic of the week: Emerging market currencies in the shadow of US elections

  • Despite the Fed’s rate cuts, emerging market currencies have not performed;
  • This is due to the strengthening of the dollar and to the uncertainty about the U.S. election outcome;
  • Trade policy, a reduction in foreign direct investment (FDI) and remittances from migrant workers, are the three main specific risks for emerging market currencies;
  • However, beyond the election, fiscal risk remains the main market mover for EM currencies, particularly those in Latin America, such as the Mexican peso, whose growth prospects are deteriorating;
  • The volatility in the Brazilian real seems excessive to us, given the improvement in growth prospects and the external position;
  • We favor cross-currency strategies rather than those against the dollar.

Market review: Relative Calm Before the Storm

  • Markets are focused on the U.S. election;
  • The T-Notes is stabilized around 4.2 %;
  • Stocks are declining in Europe, with profits under pressure in several sectors;
  • Gold as the ultimate safe haven.

Zouhoure Bousbih’s podcast :

  • Topic of the week – US rates, Eurozone surveys and Moody’s decision about France’s rating;
  • Theme – Emerging Market Currencies in the shadow of U.S. elections.

Chart of the week

canadian bond spread vs us treasuries

The Bank of Canada has accelerated its monetary easing cycle by lowering its key interest rate by 50 basis points to 3.5%. This follows three previous rate cuts of 25 basis points each.

This has widened the 10-year interest rate differential with the United States to 100 basis points, for the first time since 2013.

Further rate cuts are expected due to the deterioration of growth prospects linked to weak consumption. The bulk of GDP growth in Q2 was driven by government spending.

Figure of the week

6%

This is the forecast for the French budget deficit as a percentage of GDP by 2029 according to the International Monetary Fund, which is the current level. Public debt is expected to reach 124.1% of GDP at that time.

MyStratWeekly : Market views and strategy

Download MyStratWeekly – October 29th 2024
  • Axel Botte

    Axel Botte

    Head of markets strategy

  • Zouhoure Bousbih

    Zouhoure Bousbih

    Emerging countries strategist

  • Aline Goupil-Raguénès

    Aline Goupil-Raguénès

    Developed countries strategist

Reading time : 15 min.
INSIGHTS MARKETS
In 2023, money market funds experienced a significant increase, benefiting from a backdrop of rising interest rates and inflation. Investors are reassessing their approach to liquidity, with a 21% increase in assets under management, followed by an 11% rise in 2024. As the prospect of rate cuts looms, the sustainability of these attractive yields remains uncertain.
11/05/2024
Reserved for pros
Podcast
Reading time : 30 min.
NEWS MARKETS
Read our market review and find out all about our theme of the week in MyStratWeekly and its podcast with our experts Axel Botte, Aline Goupil-Raguénès and Zouhoure Bousbih.
11/05/2024
Reserved for pros
Reading time : 15 min.
INSIGHTS MARKETS
The world is holding its breath ahead of the US elections on November 5. The outcome will be positive or negative for emerging market currencies, depending on the political choices implemented.
10/25/2024