RBI monetary policy meet: This is what investors have pinned their hopes on
Emerging markets also face near-term risks from U.S. protectionism, according to NatWest Markets. China said Sunday that all commitments made so far in talks with the U.S. over trade will be withdrawn if President Donald Trump carries out his threat to impose tariffs. The U.S. last week opened a multi-front trade assault on allies and adversaries alike, imposing metal duties on the EU, Canada and Mexico.
(Bloomberg) Central bankers won’t have it easy this week. They’ll need to weigh a rising dollar, renewed fears of a global trade war and a robust U.S. jobs report that prompted traders to rebuild bets for four rates hikes this year.
And that’s under the watchful eye of investors who’ve suffered declines in emerging-market stocks and currencies for all but two weeks this quarter.
Lira traders will be eyeing inflation data due Monday to assess whether Turkey’s central bank will raise rates again. Meanwhile, a surprising hawkish tilt revealed in the Reserve Bank of India’s April policy minutes, and the recent spike in oil, boosted speculation the authority may lift rates as soon as Wednesday.
“For now the Central Bank of Turkey appears to have stabilized the lira, but the market will still closely follow their meeting on Thursday for any additional adjustments to policy,” said Maximillian Lin, a Singapore-based emerging markets Asia strategist at NatWest Markets. “Rupee weakness is factoring into expectations for this RBI meeting, with a minority of forecasters expecting a hike. I think the statement will be less hawkish than market expectations.”
Emerging markets also face near-term risks from U.S. protectionism, according to NatWest Markets. China said Sunday that all commitments made so far in talks with the U.S. over trade will be withdrawn if President Donald Trump carries out his threat to impose tariffs. The U.S. last week opened a multi-front trade assault on allies and adversaries alike, imposing metal duties on the EU, Canada and Mexico.
A JPMorgan Chase & Co. gauge of expected swings in developing-nation currencies climbed last week to the highest level since April 2017 after Italy’s political crisis roiled global markets. Emerging-market stocks declined for a fourth month in May, the longest run since 2016, while currencies extended losses from April. Local-currency bonds fell for second month in May.
article first appeared in Bloomberg.com, and is published by special arrangement.)
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