Asia biased macro & technical analysis, Untying The Gordian Knot

Untying The Gordian Knot

Asia biased macro & technical analysis

A differentiated process with a primary focus on Asia. Technical Analysis as core and Macro drivers that could bring the view to fruition & changes that could make the idea fall apart. The objective is to be the best in class, hence corner shop.

FX & Rates

<ul><li>U.S. interest rates have been climbing since early January 2024 after reaching their lowest points between December 27th and January 11th.</li><li>For example, the yield on 2-year Treasury bonds has increased by 52 basis points (bps), and the yield on 10-year bonds has risen by 49 bps since their respective lows.</li><li>Similarly, the Dollar Index (DXY), which measures the value of the U.S. dollar against a basket of other currencies, experienced its weakest point on December 28th, 2023.</li></ul>

U.S. interest rates have been climbing since early January 2024 after reaching their lowest points between December 27th and January 11th.For example, the yield on 2-year Treasury bonds has increased by 52 basis points (bps), and the yield on 10-year bonds has risen by 49 bps since their respective lows.Similarly, the Dollar Index (DXY), which measures the value of the U.S. dollar against a basket of other currencies, experienced its weakest point on December 28th, 2023.

US Dollar: Trend Reversal or Start of Bull Run

<ul><li>After a 50 bp hike three times a row, RBI softened and increased the repo rate by 35 basis points to 6.25%.</li><li>Consequently, the standing deposit facility (SDF) rate stands adjusted to 6%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50%</li><li>The basic facts on the ground have not changed much since the last policy in September-end: global headwinds, inflationary pressures arising from both exogenous and endogenous sources, and adverse terms of trade balanced against an economy exhibiting nascent growth with all the growth engines - industrial, agricultural and service sectors - in early stages of combustion.</li></ul>

After a 50 bp hike three times a row, RBI softened and increased the repo rate by 35 basis points to 6.25%.Consequently, the standing deposit facility (SDF) rate stands adjusted to 6%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50%The basic facts on the ground have not changed much since the last policy in September-end: global headwinds, inflationary pressures arising from both exogenous and endogenous sources, and adverse terms of trade balanced against an economy exhibiting nascent growth with all the growth engines - industrial, agricultural and service sectors - in early stages of combustion.

Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

<ul>
<li>The Reserve Bank of India roiled the market yesterday with an unexpected inter-meeting policy rate increase, leading to rates moving higher across the curve.</li>
<li>I have been arguing for a few months that the RBI needs to start raising rates based on the high inflation and narrowing rate differential with the US.</li>
<li>Despite the move higher in rates in India, I continue to like paying rates in India, particularly against receivers in other countries to hedge against the volatile US rates.</li>
</ul>


The Reserve Bank of India roiled the market yesterday with an unexpected inter-meeting policy rate increase, leading to rates moving higher across the curve.
I have been arguing for a few months that the RBI needs to start raising rates based on the high inflation and narrowing rate differential with the US.
Despite the move higher in rates in India, I continue to like paying rates in India, particularly against receivers in other countries to hedge against the volatile US rates.


India’s “Surprise” Rate Hike Was Overdue

<ul>
<li>The Indonesian rupiah has outperformed most EM currencies, particularly other Asian currencies, and has done so with low volatility in contrast with the rising volatility of the EM FX index.</li>
<li>Looking ahead, headwinds may be appearing with the interest-rate differential working against the currency as the Fed starts raising rates and higher inflation leading to lower real rates.</li>
<li>While the rise in commodity prices is generating trade surpluses for now, the current account may turn negative from positive with a rise in imports accompanying the economy's reopening.</li>
</ul>


The Indonesian rupiah has outperformed most EM currencies, particularly other Asian currencies, and has done so with low volatility in contrast with the rising volatility of the EM FX index.
Looking ahead, headwinds may be appearing with the interest-rate differential working against the currency as the Fed starts raising rates and higher inflation leading to lower real rates.
While the rise in commodity prices is generating trade surpluses for now, the current account may turn negative from positive with a rise in imports accompanying the economy's reopening.


Indonesian Rupiah Shines in Volatile Times

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Olivier Desbarres

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4X Global Research

4X Global Research was founded in 2017 to provide institutional and corporate clients with the substantive research, high-quality analysis and thoughtful insight on Emerging and G20 economies and financial markets they need to make informed and timely decisions and gain an edge in their investments.

<ul>
<li>Russian invasion of Ukraine on 24 Feb has generated much uncertainty and financial market volatility, including in FX markets. </li>
<li>Some asset prices have moved broadly as “expected”, with Rouble, Euro and global equities down and Dollar,  gold and fossil fuel prices up. </li>
<li>But other asset prices have been range bound in past fortnight, including S&amp;P 500, Treasury yields and a number of Asian currencies, or held their own (AUD and NZD).</li>
</ul>


Russian invasion of Ukraine on 24 Feb has generated much uncertainty and financial market volatility, including in FX markets. 
Some asset prices have moved broadly as “expected”, with Rouble, Euro and global equities down and Dollar,  gold and fossil fuel prices up. 
But other asset prices have been range bound in past fortnight, including S&amp;P 500, Treasury yields and a number of Asian currencies, or held their own (AUD and NZD).


India

The Indian rupee is the official currency of India. 

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US Dollar: Trend Reversal or Start of Bull Run

U.S. interest rates have been climbing since early January 2024 after reaching their lowest points between December 27th and January 11th.

Untying The Gordian Knot

RBI Rate Decision

Consequently, the standing deposit facility (SDF) rate stands adjusted to 6%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50%

Untying The Gordian Knot

India’s “Surprise” Rate Hike Was Overdue

India's rate hike yesterday was in line with my view as I have been arguing for it based on the high inflation and narrowing rate differential with...

Gautam Jain, PhD, CFA

Indonesian Rupiah Shines in Volatile Times

The Indonesian rupiah has outperformed most other EM currencies but headwinds may be appearing for the currency as the Fed starts raising rates and...

Gautam Jain, PhD, CFA

Market Snapshot, Theatre of War

Amidst carnage in financial markets, some assets - inc US Treasury yields, some Asian and high-yielding EM currencies, AUD & NZD and even S&P 500 -...

Olivier Desbarres

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