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28 Jan 2014
Flash: Financial Markets recover from bout of nerves - Societe Generale
FXstreet.com (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale notes that financial markets have recovered from yesterday's bout of nerves.
Key Quotes
"A bail-out of the troubled high-yield trust in China and the announcement of an emergency policy announcement tonight (22:00GMT) by the Central Bank of Turkey, helped turn the mood. We'll see what the CBT announces (a 200bp rate hike is the bet), and then we'll see how long the relative calm can last."
"There has been a shift in the balance of global growth as Chinese demand for raw material wanes, and as higher wages and strong currencies make many EM economies less competitive. Meanwhile, the Fed policy cycle IS turning, and 4 years of capital being pushed out in a quest for less derisory yields, are ending. This isn't a repeat of the 1990s Asian crises, because domestic conditions are completely different but it is a turn in the global market cycle."
"We need to transition from a world where investment is pushed out of the US/Europe/Japan to one whewre it is pulled in by attractive prospects. When that happens, flows will be differentiated much more from one country (em or otherwise) to another."
"But for now, we're just waiting for gloal captial flows to calm down. In the meantime, We'll watch the high-beta assets and currencies rally, and we'll wait to sell again. Core G10FX views (more weakness ahead for the AUD and CAD) are unchanged."
Key Quotes
"A bail-out of the troubled high-yield trust in China and the announcement of an emergency policy announcement tonight (22:00GMT) by the Central Bank of Turkey, helped turn the mood. We'll see what the CBT announces (a 200bp rate hike is the bet), and then we'll see how long the relative calm can last."
"There has been a shift in the balance of global growth as Chinese demand for raw material wanes, and as higher wages and strong currencies make many EM economies less competitive. Meanwhile, the Fed policy cycle IS turning, and 4 years of capital being pushed out in a quest for less derisory yields, are ending. This isn't a repeat of the 1990s Asian crises, because domestic conditions are completely different but it is a turn in the global market cycle."
"We need to transition from a world where investment is pushed out of the US/Europe/Japan to one whewre it is pulled in by attractive prospects. When that happens, flows will be differentiated much more from one country (em or otherwise) to another."
"But for now, we're just waiting for gloal captial flows to calm down. In the meantime, We'll watch the high-beta assets and currencies rally, and we'll wait to sell again. Core G10FX views (more weakness ahead for the AUD and CAD) are unchanged."