August is underway and there is still no sign of a summer shakedown – even the FAANG adjustments in the past few weeks have failed to trigger more than a ripple across various markets.
Interest rate hikes in the UK and India are a little reminder of what’s to come (normalization in G10, inflation-fighting from currency weakness in EM).
Turkey is not to be ignored, as both the lira and bond markets are screaming ‘Crisis!’ and the numbers confirm it. The country faces $180billion of foreign currency debt due in the next 12 months, with reserves currently at $115billion. The twist here is when help is finally sought, Trump’s threat of US sanctions is now an enemy, leaving Putin to step in. This situation could get quite messy politically as well as financially.
In our week on week comparison, Brent oil has fallen, but renewed sanctions on Iran are likely to firm up the price. The S&P continues to move higher while EM holds its ground broadly.
Notes from our trader:
By Malcolm Day, Managing Director, FX and Treasury Management Emergent Technology