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relates to Take a Peek on the ECB's 38th Floor as Philip Lane Awaits Role relates to Bond Traders Are About to Get a Big Update on Fed's Portfolio relates to ECB Moves Closer to Global Dovish Shift as Coeure Mulls Loans relates to Emerging Markets Retreat Amid Global Growth Concerns: EM Review relates to Fed Will Probably Change Its Approach to Inflation, Dudley Says relates to Pemex Assistance Plan Fails to Impress Bondholders relates to Hedge Funds See Windfall From Bets on Puerto Rico After Storm relates to Fed’s Clarida Watches a Price Gauge That Just Tied a Record Low relates to Surprise! Refinancing Complex Debt Instruments Is Hard relates to Duterte Signs Bills to Ease Inflation, Boost Central Bank Powers
relates to Take a Peek on the ECB's 38th Floor as Philip Lane Awaits Role relates to Bond Traders Are About to Get a Big Update on Fed's Portfolio relates to ECB Moves Closer to Global Dovish Shift as Coeure Mulls Loans relates to Emerging Markets Retreat Amid Global Growth Concerns: EM Review relates to Fed Will Probably Change Its Approach to Inflation, Dudley Says relates to Pemex Assistance Plan Fails to Impress Bondholders relates to Hedge Funds See Windfall From Bets on Puerto Rico After Storm relates to Fed’s Clarida Watches a Price Gauge That Just Tied a Record Low relates to Surprise! Refinancing Complex Debt Instruments Is Hard
markets

Trade Talks to Eclipse All as Emerging-Market Bulls Take a Hit

Updated on

Trade Talks to Eclipse All as Emerging-Market Bulls Take a Hit

  • Sentiment to be influenced by trade talks this month: Fidelity
  • Emerging stock gauge closes below 200-day moving average
LGT Bank Is 'Constructive' on Asia Ex-Japan Stocks, Hofer Says

The looming U.S.-China trade talks may be set to reveal how complacent traders have been about the dispute just as the rally in emerging markets loses steam.

Last week’s sudden retreat came as representatives from the world’s two biggest economies prepared to discuss the standoff, with President Donald Trump saying he wouldn’t meet his Chinese counterpart Xi Jinping before a 90-day truce ends March 1. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are leading a delegation to Beijing, and if Trump deems that negotiations are moving forward, he may be tempted to extend the deadline. Otherwise, tariffs on $200 billion of Chinese goods will more than double.

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“Sentiment for the rest of the month is likely to be heavily influenced by the ongoing U.S.-China trade negotiations,” said Paul Greer, a London-based money manager at Fidelity International. “While we are still bullish on the asset class based on valuations, technicals and the exogenous environment, we think the market may pause for breath over the coming two to three weeks.”

Emerging-market stock gauge falls back below 200-day moving average

The MSCI Emerging Markets Index declined last week, ending its longest winning streak in a year. The gauge had finally broken through its 200-day moving average late January, only to be dragged below that level on Friday. The last time the measure fell below the 200-day level was in May, about four months before it sank into a bear market.

Read More: BofA, SocGen Say It’s Time to Hedge Against Emerging-Market Risk

China Returns

  • China reopens after the week-long Lunar New Year holidays, with a flurry of data that will offer clues on how the world’s largest developing economy performed in January
    • Downbeat trade data due Thursday will reignite concerns over global growth amid the dispute with the U.S.
    • Consumer- and producer-price inflation on Friday will show whether deflation pressures are building up, which could squeeze corporate profitability at home and lead to softer demand for imports. At the same time, the People’s Bank of China may have more scope for further easing
  • For the yuan, “ongoing talks make a unilateral devaluation very unlikely,” Goldman Sachs Group Inc. strategists including New York-based Zach Pandl wrote in a report

Brazil’s Pension Overhaul

  • The debate over Brazil’s pension overhaul -- a key step in shoring up the nation’s finances -- will likely heat up as investors await the government’s proposal to be submitted to Congress. The real is among the top performers in emerging markets this year, spurred in part by optimism the government will fix the bloated pension system
  • The plan may be sent to lawmakers the week of Feb. 19 or when President Jair Bolsonaro recovers from surgery, according to an administration official. He’s responding well to new medication aimed at fighting pneumonia, a spokesman said

Pemex Revival

  • The Mexican government’s plan to revive Pemex will be announced, according to President Andres Manuel Lopez Obrador
  • The oil giant’s bonds rallied on Tuesday after he said "extraordinary" measures would be unveiled to help the debt-laden company

Politics

  • Nigerian elections on Saturday are likely to be a neck-and-neck contest between incumbent President Muhammadu Buhari and the People’s Democratic Party candidate Atiku Abubakar, a businessman and former vice president
    • Yields on Nigeria’s 12-month Treasury bills are near the highest since 2017
  • Russia’s finance ministry vowed further action to entice fresh capital after Moody’s Investors Service joined two other companies in raising the country’s debt to investment grade; the ruble is the top performer in emerging markets this year
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— With assistance by Alec McCabe, Rita Nazareth, and Karl Lester M Yap