Emerging Market Weekly Pulse

The report highlights a hawkish turn among EM central banks, led by an unexpected 50bp hike in Indonesia, while addressing China's data weakness and political instability in Brazil.

Key Takeaways

• 1.Bank Indonesia surprised markets with a 50bp jumbo policy rate hike to 5.25% to stabilize the IDR.
• 2.China April macro data significantly underperformed, leading to expectations of incremental policy easing to stabilize demand.
• 3.Brazilian politics and a corruption scandal involving Flavio Bolsonaro have triggered a sharp reversal in the BRL and stock market.

Table of Contents

• Overview
• Main strategies
• Main changes to our forecasts
• Performance of the main EM asset classes
• EMEA: central banks to wait and see
• Egypt: CBE likely to refrain from tightening (but it is a close call)
• Hungary: MPC preview
• Asia: Asia CBs making a hawkish shift
• China: incremental policy easing to step up after April data weakness
• Taiwan: clients optimistic on Taiwan
• Indonesia: jumbo 50bp hike flags the need for hawkishness
• Korea: BOK to turn hawkish but market could already be more hawkish
• Latam: falling off the ‘Dark Horse’ in Brazil
• Brazil: the latest scandal undermines Flavio Bolsonaro’s support in the upcoming presidential election
• Trade ideas
• Interest rates: what's priced in vs our forecasts
• FX: what's priced in vs our forecasts
• CACIB EM portfolio flow indexes
• Calendar
• Economic forecasts
• Exchange rate forecasts
• Policy rate forecasts
• Emerging Markets Research advanced tools
• Red Mount Analytics

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