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.

FX & Rates

The Fed updated “dot-chart” of all FOMC members’ expectations of the appropriate policy rate points to only an incrementally less dovish stance. Based on a weighted average FOMC members still only expect one 25bp hike by end-2023, according to our estimates.Fed seems eager to cool market concerns that it will have no choice but to start hiking rates and to ultimately cap Treasury yields or at least slow recent increase in long-end yields. Price action in 2 and 5-year Treasuries suggests it partly succeeded, even if briefly.However, this still very dovish Fed policy rate outlook jars with its updated forecasts for US inflation and particularly GDP growth. The Fed’s twin arguments are that rapid growth this year will not be very inflationary due to slack in labour market and that following a period of inflation-undershoot it’s willing to accept a modest overshoot in PCE-inflation above 2%. The latter will have come as little surprise. The more contentious issue in our view is the Fed’s prognosis that core PCE-inflation will rise only modestly from 1.5% yoy in January to 2.2% yoy by end-year despite US GDP growth hitting a 37-year high of 6.5% this year.The Treasury yield curves have steepened further in the past 72 hours. This suggests that bond markets are not convinced about the Fed’s macro/policy matrix or that the Fed’s pick-up in Treasury purchases in the past couple of months will prove sufficient.Moreover, the 6.9% collapse in crude oil price yesterday and correction in US equities (particularly the more risk-sensitive Nasdaq) are clear pointers that markets remain concerned about the impact of higher US yields on global demand and equity valuations.FX markets have been more sanguine. Global FX volatility has risen in past 72 hours but remains in line with 10-year average and most currencies, particularly in Asia, have moved little. The safe-haven Dollar has proven relatively resilient, in line with our February view. While the Russian Rouble has (perhaps unsurprisingly) weakened most, most other high-yielding emerging market currencies have outperformed, thanks in large part to greater-than-expected central bank rate hikes in Brazil and Turkey of respectively 75bp and 200bp.  The risk now is that markets redouble their attention on central banks perceived as being “behind the curve”. These include the Norges Bank and CE3 central banks in our view.

The Fed updated “dot-chart” of all FOMC members’ expectations of the appropriate policy rate points to only an incrementally less dovish stance. Based on a weighted average FOMC members still only expect one 25bp hike by end-2023, according to our estimates.Fed seems eager to cool market concerns that it will have no choice but to start hiking rates and to ultimately cap Treasury yields or at least slow recent increase in long-end yields. Price action in 2 and 5-year Treasuries suggests it partly succeeded, even if briefly.However, this still very dovish Fed policy rate outlook jars with its updated forecasts for US inflation and particularly GDP growth. The Fed’s twin arguments are that rapid growth this year will not be very inflationary due to slack in labour market and that following a period of inflation-undershoot it’s willing to accept a modest overshoot in PCE-inflation above 2%. The latter will have come as little surprise. The more contentious issue in our view is the Fed’s prognosis that core PCE-inflation will rise only modestly from 1.5% yoy in January to 2.2% yoy by end-year despite US GDP growth hitting a 37-year high of 6.5% this year.The Treasury yield curves have steepened further in the past 72 hours. This suggests that bond markets are not convinced about the Fed’s macro/policy matrix or that the Fed’s pick-up in Treasury purchases in the past couple of months will prove sufficient.Moreover, the 6.9% collapse in crude oil price yesterday and correction in US equities (particularly the more risk-sensitive Nasdaq) are clear pointers that markets remain concerned about the impact of higher US yields on global demand and equity valuations.FX markets have been more sanguine. Global FX volatility has risen in past 72 hours but remains in line with 10-year average and most currencies, particularly in Asia, have moved little. The safe-haven Dollar has proven relatively resilient, in line with our February view. While the Russian Rouble has (perhaps unsurprisingly) weakened most, most other high-yielding emerging market currencies have outperformed, thanks in large part to greater-than-expected central bank rate hikes in Brazil and Turkey of respectively 75bp and 200bp.  The risk now is that markets redouble their attention on central banks perceived as being “behind the curve”. These include the Norges Bank and CE3 central banks in our view.

EM Currencies: Central Bank Friends and Foes

Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

In the near-term, we see room for the Turkish lira to appreciate as it catches up with its EM peers following the aggressive rate hike by the central bank, taking the real rate to a high positive level.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market.

In the near-term, we see room for the Turkish lira to appreciate as it catches up with its EM peers following the aggressive rate hike by the central bank, taking the real rate to a high positive level.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market.

In this note, we discuss the relationship between a currency's carry with its volatility, and use it to identify dislocations.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market.

In this note, we discuss the relationship between a currency's carry with its volatility, and use it to identify dislocations.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market.

FX Dashboard: Is Carry Compensating for Volatility?

In this note, we discuss the underperformance of the Russian ruble (RUB) and the Colombian peso (COP) relative to the rally in oil prices.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market. The analysis, therefore, is not a forecasting tool but to be used for identifying dislocations, which we loosely define as price moves that cannot be justified by fundamentals.

In this note, we discuss the underperformance of the Russian ruble (RUB) and the Colombian peso (COP) relative to the rally in oil prices.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market. The analysis, therefore, is not a forecasting tool but to be used for identifying dislocations, which we loosely define as price moves that cannot be justified by fundamentals.

In this note, we discuss the binary risks in Brazilian real, especially with the currency appreciably cheap in REER terms.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market. The analysis, therefore, is not a forecasting tool but to be used for identifying dislocations, which we loosely define as price moves that cannot be justified by fundamentals.

In this note, we discuss the binary risks in Brazilian real, especially with the currency appreciably cheap in REER terms.The attached file is a snapshot of EM currency market, which we produce daily, and where we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to the broad market. The analysis, therefore, is not a forecasting tool but to be used for identifying dislocations, which we loosely define as price moves that cannot be justified by fundamentals.

FX Dashboard: Brazilian Real Cheap in REER Terms

Russia

The Russian ruble is the official currency of The Russian Federation. 

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RUB (USDRUB CURNCY)

EM Currencies: Central Bank Friends and Foes

Fed's updated "dot chart" + forecasts and asset purchases have not convinced bond, equity or crude oil markets. FX reaction more sanguine but...

Olivier Desbarres

FX Dashboard: Lira Re-Engages with EM

In the near-term, we see room for the Turkish lira to appreciate as it catches up with its EM peers following the aggressive rate hike by the...

Gautam Jain, PhD, CFA

FX Dashboard: Is Carry Compensating for Volatility?

In this note, we discuss the relationship between a currency's carry with its volatility, and use it to identify dislocations.

Gautam Jain, PhD, CFA

FX Dashboard: Oil Currencies Vs Oil

Attached is our daily FX Dashboard that helps identify dislocations among EM currencies. In this note, we discuss the underperformance of Russian...

Gautam Jain, PhD, CFA

FX Dashboard: Brazilian Real Cheap in REER Terms

Attached is our daily FX Dashboard that identifies dislocations among EM currencies. In this note, we discuss the binary risks in Brazilian real,...

Gautam Jain, PhD, CFA

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