Limiting the impact of emerging market volatility. October was a challenging month for financial markets. Some emerging market currencies did better than expected, though not well enough to offset the losses from earlier in the year. Hedged investors were well served and they slept well, too. Dynamic overlay can also help manage EM volatility, which looks likely to continue. Our assessment.
The US economy has passed its peak. The American economy continues moving at a rapid pace but we think it may have passed its peak. The recent data from the real estate market, in particular, has been disappointing. Growth is also slower in the Eurozone. However, leading indicators continue to point to above-potential growth in the short term in both the Eurozone and the US. Our overview.
EM currencies still unusually cheap. While the more liquid, free-floating emerging market currencies have made up some of their losses over the past month, they continue to show an unusually large valuation gap relative to the US dollar. The Chinese renminbi now finds itself in uncharted waters. Our analysis.
The first quarter is over, so it’s time to take stock and to cast our eyes forward to the second q...» more