Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

<ul>
<li>In line with my view that the dollar remains strong in the near term, one of the trading strategies that I have suggested is relative-value trades within EM currencies.</li>
<li>The volatility of EM currencies continues to rise, which in theory is supportive of relative-value trades as such environments are usually accompanied by wide dispersion among EM currencies. </li>
<li>However, I find that cross-correlations among EM currencies have risen, leading to a narrowing of dispersion between them, which means the environment is no longer supportive of relative-value trades.</li>
</ul>


In line with my view that the dollar remains strong in the near term, one of the trading strategies that I have suggested is relative-value trades within EM currencies.
The volatility of EM currencies continues to rise, which in theory is supportive of relative-value trades as such environments are usually accompanied by wide dispersion among EM currencies. 
However, I find that cross-correlations among EM currencies have risen, leading to a narrowing of dispersion between them, which means the environment is no longer supportive of relative-value trades.


Is the Environment Supportive of EM FX Relative-Value Trades?

Macroeconomic and Investing, The Macro Compass

Alfonso Peccatiello (Alf)

Macroeconomic and Investing

The Macro Compass

Actionable investment ideas and unique global macro insights. From the desk of a former Head of $20 bn Investment Portfolio straight to your inbox.

Actionable Investment Ideas

Macroeconomics

<ul>
<li>In the ‘80s, independent economist Yardeni coined the term ‘‘bond vigilantes’’ to refer to fixed income investors disciplining authorities for running inflationary fiscal and monetary policies and ultimately restoring order through the bond market.</li>
<li>In 2022, we are witnessing the first preliminary signs of the return of the global macro vigilantes</li>
<li>Amongst others, George Soros is an eminent member of this selected group of macro investors who challenge policymakers across countries and relentlessly chase regime-change narratives once they see a good opportunity</li>
</ul>


In the ‘80s, independent economist Yardeni coined the term ‘‘bond vigilantes’’ to refer to fixed income investors disciplining authorities for running inflationary fiscal and monetary policies and ultimately restoring order through the bond market.
In 2022, we are witnessing the first preliminary signs of the return of the global macro vigilantes
Amongst others, George Soros is an eminent member of this selected group of macro investors who challenge policymakers across countries and relentlessly chase regime-change narratives once they see a good opportunity


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.

Technical Analysis

<ul><li>While much focus has been on EURO/USD cross, Asian currencies haven’t seen that much focus due to range-bound markets.</li><li>That is until two weeks ago when the USD/YEN breakout caught the imagination and became the centre of all things foreign exchange. Bonds &amp; short-term interest rates have been the macro focus of 2022.</li><li>The extent to which US bond yields have risen signals that the bond sell-off is not about to end despite the inverted yield curve. It is likely to cause more pain for EM countries.</li></ul>

While much focus has been on EURO/USD cross, Asian currencies haven’t seen that much focus due to range-bound markets.That is until two weeks ago when the USD/YEN breakout caught the imagination and became the centre of all things foreign exchange. Bonds &amp; short-term interest rates have been the macro focus of 2022.The extent to which US bond yields have risen signals that the bond sell-off is not about to end despite the inverted yield curve. It is likely to cause more pain for EM countries.

Founder

Olivier Desbarres

Exacting. Excellent. Exceeding. Exemplary.

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).


Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Provide Comprehensive Analysis & Commentary

SAV Markets

SAV Markets aims to provide comprehensive analysis & commentary on foreign exchange and asset markets. The approach is multi asset as markets are typically interlinked. Cause and effect are always at work, even if those effects take time to manifest. As nothing is permanent we strive to get ahead of the curve in an ever changing world.

<ul>
<li>If earlier charts are correct in suggesting lower US long end yields in the short term then USDJPY is vulnerable</li>
<li>So far it has failed twice at 116.35 thereby creating the possibility of a double top</li>
<li>Support is seen at 113.47 followed by a range of levels between 112.14 and 112.53</li>
</ul>


If earlier charts are correct in suggesting lower US long end yields in the short term then USDJPY is vulnerable
So far it has failed twice at 116.35 thereby creating the possibility of a double top
Support is seen at 113.47 followed by a range of levels between 112.14 and 112.53


Japan

The Japanese yen is the official currency of Japan. 

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Is the Environment Supportive of EM FX Relative-Value Trades?

The rise in the volatility of EM currencies should in theory be supportive of relative-value trades, but of late, the dispersion between them is...

Gautam Jain, PhD, CFA

The Macro Vigilantes Are Waking Up

‘‘We're in a brave new world of excesses in fiscal and monetary policy, and that's where the bond vigilantes thrive’’ Ed Yardeni In the ‘80s,...

Alfonso Peccatiello (Alf)

A powder keg

While much focus has been on EURO/USD cross, Asian currencies haven’t seen that much focus due to range-bound markets. That is until two weeks ago...

Untying The Gordian Knot

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

USDJPY at Risk

The latest developments in US fixed income markets are also pointing to a lower USDJPY which has failed twice already at 116.35. Lower levels in...

Shyam Devani

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