EM and risk assets came under greater pressure Friday as trade tensions mount. This backdrop is not conducive for EM by any stretch, and unless tensions are ratcheted down, selling pressures are likely to remain in play.
China reports March new loan and money supply data this week, but no date has been set. It reports March CPI and PPI Wednesday, with the former expected to rise 2.6% y/y and the latter by 3.3% y/y. March trade will be reported Friday, with exports expected to rise 11.9% y/y and imports by 12.4% y/y. China-US trade relations are likely to remain the near-term focus.
Hungary reports February trade Monday, and a EUR710 million surplus is expected. It then reports March CPI Tuesday, which is expected to rise 2.1% y/y vs. 1.9% in February. If so, inflation would move back into the 2-4% target range. However, the central bank remains in dovish mode and is likely to keep monetary policy loose in 2019.
Taiwan reports March trade Monday. Exports are expected to rise 7.1% y/y and imports by 9.1% y/y. Taiwan then reports March CPI Tuesday, which is expected to rise 1.65% y/y vs. 2.19% in February. While the central bank does not have an explicit inflation target, relatively low price pressures should allow it to remain on hold this year.
Chile reports March trade Monday, and a $900 million surplus is expected. Copper prices came under pressure last month, and so we see downside risks to exports. We remain skeptical that the central bank will start hiking rates in H2, as inflation remains below target and the economy sluggish. Next policy meeting is May 3, rates are likely to remain steady at 2.5%.
Mexico reports March CPI Monday, which is expected to rise 5.1% y/y vs. 5.34% in February. It reports February IP Wednesday. Banco de Mexico then meets Thursday and is expected to keep rates steady at 7.5%. Easing inflation and a firm peso should allow the bank to stand pat for now, but market turmoil will likely rise as the July elections approach.
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