Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

Since the hawkish FOMC meeting last week, the US rates curve has flattened. In this note, we address the question: if the US curve continues to flatten, will it take EM with it? Our short answer is yes, but with a couple of caveats.Separately, the attached file is a snapshot of the EM 10y rates market in which we seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

Since the hawkish FOMC meeting last week, the US rates curve has flattened. In this note, we address the question: if the US curve continues to flatten, will it take EM with it? Our short answer is yes, but with a couple of caveats.Separately, the attached file is a snapshot of the EM 10y rates market in which we seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

Rates 10y Dashboard: Can US Curve Flattening Pull EM with It?

While our base case is not one of a repeat of the reflationary scare from earlier this year, we need to be cognizant of the risk with the Fed beginning to tiptoe towards tapering. As such, similar to an earlier analysis on currencies, we evaluate which EM rates are the most vulnerable if there is another steep correction in US Treasuries.Separately, the attached file is a snapshot of the EM 10y rates market in which we seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

While our base case is not one of a repeat of the reflationary scare from earlier this year, we need to be cognizant of the risk with the Fed beginning to tiptoe towards tapering. As such, similar to an earlier analysis on currencies, we evaluate which EM rates are the most vulnerable if there is another steep correction in US Treasuries.Separately, the attached file is a snapshot of the EM 10y rates market in which we seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

Rates 10y Dashboard: Which EM Rates Are Most Vulnerable to Rising US Rates?

We follow up on an earlier note today on EM currencies as we extend the analysis to EM rates by comparing the impact on them during the current reflationary episode with that during the Taper Tantrum of 2013.Separately, the attached file is a snapshot of the EM 10y rates market in which we seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

We follow up on an earlier note today on EM currencies as we extend the analysis to EM rates by comparing the impact on them during the current reflationary episode with that during the Taper Tantrum of 2013.Separately, the attached file is a snapshot of the EM 10y rates market in which we seek to identify the leaders and laggards among countries by comparing the performance of each to its history as well as to other countries based on their respective betas to an EM rates index.

Rates 10y Dashboard: An Update on Taper Tantrum Vs Current Reflationary Scare – Part 2

With the market speculating on whether or not there will be hints on tapering when the FOMC decision is announced later today, we decided to update our comparative analysis of the impact on EM currencies during the current reflationary episode with that during the Taper Tantrum of 2013.Separately, the attached file is a snapshot of the EM currency market in which 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 an EM currency index.

With the market speculating on whether or not there will be hints on tapering when the FOMC decision is announced later today, we decided to update our comparative analysis of the impact on EM currencies during the current reflationary episode with that during the Taper Tantrum of 2013.Separately, the attached file is a snapshot of the EM currency market in which 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 an EM currency index.

FX Dashboard: An Update on Taper Tantrum Vs Current Reflationary Scare – Part 1

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

We continue to see signs of improving risk appetites alongside healthy market dynamics. As a result, our outlook remains constructive. A breakout to new highs in the Russell 2000 (IWM) and Russell Micro-Caps (IWC), above $234.50 and $159, would likely cause us to shift to an outright bullish stance. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary, Technology, and Health Care.

We continue to see signs of improving risk appetites alongside healthy market dynamics. As a result, our outlook remains constructive. A breakout to new highs in the Russell 2000 (IWM) and Russell Micro-Caps (IWC), above $234.50 and $159, would likely cause us to shift to an outright bullish stance. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary, Technology, and Health Care.

U.S. Yields Testing Support Ahead Of FOMC Meeting

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US Treasury (10 Yr Generic) (GT10 GOVT)

Rates 10y Dashboard: Can US Curve Flattening Pull EM with It?

In this note, we address the question: if the US curve continues to flatten, as it has since the FOMC meeting last week, will it take EM with it?...

Gautam Jain, PhD, CFA

Rates 10y Dashboard: Which EM Rates Are Most Vulnerable to Rising US Rates?

Similar to an earlier analysis on currencies, we evaluate which EM rates are the most vulnerable if the risk scenario of another correction in US...

Gautam Jain, PhD, CFA

Rates 10y Dashboard: An Update on Taper Tantrum Vs Current Reflationary Scare – Part 2

We follow up on an earlier note today on EM FX as we extend the analysis to EM rates. We compare the impact on EM rates in this year's reflationary...

Gautam Jain, PhD, CFA

FX Dashboard: An Update on Taper Tantrum Vs Current Reflationary Scare – Part 1

Ahead of the FOMC decision today, we decided to update our comparative analysis of the impact on EM currencies during the current reflationary...

Gautam Jain, PhD, CFA

U.S. Yields Testing Support Ahead Of FOMC Meeting

We continue to see signs of improving risk appetites alongside healthy market dynamics. As a result, our outlook remains constructive.

Vermilion Research

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