Salient to Investors:
- David Bloom at HSBC said to sell emerging market currencies, including the Rand, Ruble and Mexican and Colombian Peso, on increasing signs of US growth supporting the US dollar . Bloom said a mass investor exodus depends on what happens to volatility on long-term US rates moving up – if long rates rise then the resulting full-blown dollar rally will hit emerging markets hard.
- Phoenix Kalen at Societe Generale expects the rand to weaken and become more volatile over the next 3 months.
- Koon Chow at Barclays said volatility remains near record lows as investors seek higher yields with US rates in their record-low zero to 0.25 percent range. Chow said low global market volatility and low yields in many developed fixed-income markets will continue to push capital to emerging markets, while gains in the dollar will help differentiate currencies.
- Futures indicate the Fed won’t raise its benchmark rate until at least mid-2015.
- Citigroup downgraded its view on developing currencies.
- Roland Gabert at DWS Investment dislikes the rand, Brazilian real, South Korean won and zloty and said discussion of a rate hike in the US is negative for emerging-market currencies.
Read the full article at http://www.bloomberg.com/news/2014-08-07/hsbc-sage-flags-emerging-market-pullback-on-dollar.html
Click here to receive free and immediate email alerts of the latest forecasts.