Emerging-Market Bulls Brace for Treasury Relapse After Rally

Aside from Russia, political risks are gathering pace in Latin America and Asia. Peruvian stocks dropped to their lowest since January after an admirer of Fidel Castro and Hugo Chavez won the most votes in the first-round of the nation’s presidential election. In China, the credit stress engulfing one of the country’s largest distressed-debt managers is also weighing on shares and bonds.

Investors will turn their attention this week to key rate decisions. Indonesia’s central bank may leave borrowing costs unchanged while their Russian counterparts hike. President Vladimir Putin will also make his annual address to the nation on Wednesday, potentially unveiling new measures to boost the economy through spending. He’s facing condemnation from Western officials over the deteriorating health of jailed opposition leader Alexey Navalny as well as the Kremlin’s hack attacks and actions toward Ukraine. The ruble has posted the third-biggest decline in emerging markets this past month.

Central Banks

• Indonesian policy makers are expected to keep their key rate on hold Tuesday as the weakening rupiah deters further easing
  • At a briefing following the March meeting, Governor Perry Warjiyo said the central bank will guard the currency to keep it in line with its fundamentals
  • The rupiah has dropped 3.4% this year, the second-worst decline in emerging Asia
  • Policy makers last lowered the seven-day reverse repo rate in February, cutting to a record low of 3.5%
  • “With the rupiah under pressure, BI’s desire to maintain external stability means rate cuts are off the cards,” Krystal Tan, an economist at Australia & New Zealand Banking Group Ltd. in Singapore, wrote in a note
• Russia’s central bank may extend its new tightening cycle on Friday
  • Bloomberg Intelligence predicts a quarter-point hike, though U.S. sanctions “raise the risk of a bigger move”
• China’s central bank will announce one- and five-year loan prime rates on Tuesday

  • Policy makers last cut the benchmarks in April 2020 to support the economy from the pandemic
  • The yuan tops emerging Asia currency gains this year after the Taiwan dollar

Trade Data

• The Philippines will release balance-of-payments data for March after reporting a deficit in February

  • The peso has dropped 0.7% this year, beating most peers
• Taiwan will publish export orders for March on Tuesday and industrial-production data on Friday
• South Korea, a barometer of global commerce, releases trade data on the first 20 days of April on Wednesday
• Thailand will publish customs-trade figures for March on Thursday
  • The baht’s 4.0% drop leads emerging Asia losses in 2021

What Else to Watch

• Brazil traders will monitor federal budget negotiations ahead of an April 22 deadline for President Jair Bolsonaro to decide on a veto
  • On Monday, a reading of the nation’s February economic activity is expected to show a 10th straight monthly increase while slipping on a year-over-year basis, according to economists surveyed by Bloomberg
  • The country’s benchmark stock index extended on Friday its longest winning streak since last November
• Argentina’s February economic activity may reflect a slide in industrial and construction activity, interrupting the nation’s recovery, according to Bloomberg Economics
  • The peso, which led declines among major currencies last year, is once again trailing all global peers to start 2021
• Colombian economic activity for February may reflect a recovery while lingering below pre-pandemic levels
  • The nation’s benchmark equity gauge has posted the biggest slide in Latin America so far this year
• Mexico is set to post bi-weekly consumer price figures on Thursday, which may show the uptrend continuing in the first two weeks of April, according to Bloomberg Economics
  • February retail sales data on Friday, meantime, are expected to fall from a year earlier, reflecting the pandemic’s lingering impact, Bloomberg Economics said
  • The peso has advanced 3.4% over the past month, the biggest gain in emerging markets during that span
• South Africa will probably report on Tuesday that headline inflation accelerated in March amid higher fuel prices
  • The rand has jumped 3.2% this year, beating all major global currencies
• Malaysia posts March inflation data on Friday after reporting its first positive reading for the consumer price index in a year in February

Bloomberg News provided this article. For more articles like this please visit bloomberg.com.

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