Updated 21 Jan-2014

Indonesia

 

INVESTMENT VIEW

  • What’s new?

    • FX: Since the start of the year, USD and JPY continue to strengthen, in particular against EM currencies. Gold futures shot higher, benefiting from renewed interest in the metal as a haven

    • Rates: US Treasurys have rallied on the combination of the soft economic news and buying from investors taking shelter from the stock-market tumult. The yield on the Treasury 10-year note fell to 2.585% (30 Jan) - its lowest level since Oct. 31.

  • What’s next? 

    • FX: Recognition that there is no silver bullet that will solve the systemic - and idiosyncratic - problems facing EM. It will be a while until risk-on environment returns. 

    • Rates: ...

  • Quick links:

 

ISM falls (Jan-2014)

ISM falls (Jan-2014)

 

UNITED STATES

 

Fed policy: ...

 

  • What's new?: Janet Yellen was sworn in as Fed Chair (3 Jan) and will deliver a congressional testimony before House and Senate committees the following week. In the first Fed meeting of the year (30 Jan), the FOMC decided to cut USD 10bn from the Fed's QE bond-buying program (current: USD 65bn per month).

  • What's next?: So far FOMC members appear unfazed by the recent equity (and emerging) market gyrations, which is hardening expectations of continuous Fed tapering through year-end. There are broad expectations that if the economy continues to grow, more cuts are in store, bringing the program to a close this year. But the level of market tumult has been such that some believe the Fed should hold steady on its stimulus and take stock of how its actions are influencing markets.. 

  • How'd we get here?: ... 

 

Growth and Employment: ...

 

  • What's new?: Recent reports have raised concerns that the U.S. economy may have lost some of its momentum. Job creation skidded sharply in Dec-2013. Several big retailers have reported lackluster holiday sales, and the housing market has shown signs of cooling in the face of higher interest rates. Car sales fell last month compared with a year earlier, but it is hoped that disappointing numbers can be blamed on unusually bad winter weather.

    • As the Fed continues to taper, there are concerns that this policy shift has come when US growth momentum begins to depress.

 

Budget ceiling: ...

 

  • What's new?: Treasury Secretary Jacob Lew pressed Congress to deal with the debt ceiling (3 Feb), saying the Obama administration has much less flexibility to avoid a crisis than in previous standoffs because it is entering the height of tax-filing season, which will require outflows in the form of tax refunds.

  • What's next?: In October, Congress agreed to suspend the debt ceiling until Feb. 7, but the government will be able to continue borrowing money to pay bills through sometime later in the month, Mr. Lew said. After that, it will be left to pay bills with only the remaining cash on hand, as well as incoming tax revenue.

  • How'd we get here?: ...

 

 

OTHER KEY ISSUES

 

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GOOD READS + BIG IDEA + OUR TAKE

 

  • Turmoil in emerging markets: What’s missing from the story? (Kristin Forbes /  MIT, 5 Feb)

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      The strikingly different reactions to the ‘taper talk’ and ‘taper start’ suggest that the simplistic storyline about what is causing recent volatility in emerging markets is missing something. This column argues that we need to add three important considerations: 1) The role of global growth and uncertainty; 2) The role of country differentiation; and 3) The role of domestic investors.

 

 

KEY RESOURCES

  • Government

    • Bank of Thailand: Home, ...

  • Thai Bond Market Association (TBMA)

  • Thailand Development Research Institute (TDRI)

  • World Bank: Economic Monitor (2012), ...

 

 

 

News Scan ("Thailand")

 

 

Recent News

  • Five groups of emerging markets to watch (WSJ, 4 Feb)

 

What do others say? Selection of remarkable quotes + views from commentators worth following:

 

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