marctomarket.com / by Marc Chandler / May 20, 2017
- China’s government approved the creation of a bond link between Hong Kong and the mainland.
- S&P upgraded Indonesia one notch to investment grade BBB- with stable.
- Fitch revised the outlook on Vietnam’s BB- rating from stable to positive.
- Egypt will announce a package of social spending soon.
- Moody’s changed the outlook on Poland’s A2 rating from negative to stable.
- Brazil press reported that meat-packing company JBS has submitted compromising tape recordings to the Supreme Court.
- Chile central bank surprised markets with a 25 bp cut but signaled a move to a neutral bias.
In the EM equity space as measured by MSCI, Hungary (+2.6%), Indonesia (+2.0%), and Peru (+1.4%) have outperformed this week, while Brazil (-11.1%), Poland (-1.8%), and Egypt (-1.7%) have underperformed. To put this in better context, MSCI EM fell -0.3% this week while MSCI DM was flat.
In the EM local currency bond space, India (10-year yield -11 bp), Korea (-7 bp), and Peru (-4 bp) have outperformed this week, while Brazil (10-year yield +155 bp), Argentina (+28 bp), and Turkey (+22 bp) have underperformed. To put this in better context, the 10-year UST yield fell 8 bp to 2.25%.
In the EM FX space, SGD (+1.3% vs. USD), ZAR (+1.0% vs. USD), and THB (+0.9% vs. USD) have outperformed this week, while BRL (-4.6% vs. USD), ARS (-3.1% vs. USD), and INR (-0.5% vs. USD) have underperformed.