As we wait for the next batch of China’s activity gauges, the Politburo expressed concern about the growth outlook and signals more fiscal support. Peru’s politics spooked the market—and some questions are still unresolved.
We are all waiting for the next batch of China’s activity gauges this weekend—the release that can send an important signal regarding the near-term growth trajectory. The consensus believes that the situation on the ground is stabilizing, and that we are not going to see further declines in the services Purchasing Managers’ Index. Meanwhile, the Politburo expressed concerns about a more difficult growth outlook in its press release and signaled a more pro-growth fiscal stance.
Another item on our watch list is Peru’s post-election policy agenda. This is part of a bigger story about LATAM’s alleged slide to populism. The developments of the past two days—especially the push for rewriting the constitution and the appointment of a left-leaning politician with no public office experience as Premier—indeed point to a populist bias, and the market got spooked. A “saving grace” may come in the form of a market-friendly Minister of Economy (the position was still vacant at the time of this note) and the reappointment of the current (very credible) governor of the central bank, but for now it is a waiting game.
This week was on the nerve-racking side, so I would like to finish it on a lighter note. Yesterday we talked about other types of EM contagion (policy contagion). Well, there is also another kind of higher yielding asset—like wild mountain strawberries. This year’s yield is off the charts (see a very representative average daily “chart” below). And please do not ask me about the place. It is classified. Porcini mushrooms are coming soon. I hope to see these high yields repeat. Have a great weekend!
Chart at a Glance: Highest Yielding (and Yummiest) Asset of the Week
Source: Natalia Gurushina