Traders of emerging-market debt have a new challenge: predicting which central banks will be first to stop rate rises, and then buying bonds from those countries.
While that might sound premature to investors digesting the Federal Reserve’s first interest-rate increase since 2018, Latin America has emerged as the front-runner in this high-stakes game after nations in the region began aggressive tightening about a year ago. Brazil indicated a rise in May would probably be its last after boosting rates almost 10 percentage points in 13 months. And central banks in Chile and Colombia raised borrowing costs last month by less than economists forecast.Higher-than-expected inflation might still derail this shift but the promise of “peak hike” for certain nations in the region has BNP Paribas Asset Management and PineBridge Investments predicting curves will steepen in Latin America, creating opportunities in shorter-maturity debt. Goldman Sachs Group is recommending steepeners — a strategy in which investors bet on short-term bonds rather then longer-dated ones — particularly in Brazil and Chile. “We expect some Latin American central banks to start slowing the pace of their hiking cycle as we think they are getting closer to their terminal rates,” said Clement Niel, a fund manager at BNP Paribas Asset Management in London. “Curves should start bull steepening as inflation slows down and central banks start considering rate cuts.” The contrast with emerging markets in Asia couldn’t be more stark. Central banks in India, Malaysia, Indonesia, Thailand and the Philippines are expected to only start raising rates in the second half of this year, according to the median estimate of economists surveyed by Bloomberg. Policy tightening is likely to weigh on shorter-maturity bonds and flatten the yield curve. In Europe, while policy makers in Poland, Hungary and the Czech Republic have already raised rates above pre-pandemic levels, they are set to stay hawkish as their proximity to the war in Ukraine is adding extra uncertainty to their economic outlook and causing the prices of their energy imports to surge. Both of these factors are negative for their bonds.That has put the focus firmly on Latin America, where yield curves have plenty of room to steepen given they are now below their long-term averages. The shorter end of the Brazilian yield curve is inverted, with two-year yields more than 70 basis points higher than five-year, compared with the average spread of positive 147 basis points since April 2017. The two-five spread in Mexico is about 10 basis points, below the long-term average of 24. “Signals of slower tightening, if not a pause, by Latin American central banks engaged in more mature hiking cycles, primarily Brazil and Chile, may leave room for more steepening than currently priced, in line with historical patterns post emerging-market yield-curve inversions,” Goldman Sachs strategists Davide Crosilla and Kamakshya Trivedi in London, wrote in a research note last month. For others such as Cathy Hepworth, head of emerging markets debt at PGIM Fixed Income in Newark, it is really difficult to make the call that Latin America is at the end of its cycle, because headline and core inflation are drifting to multi-year highs. “What you have to do is continue to focus on flatteners because it’s too much of a challenge,” Ms Hepworth said. “The margin of error is way too high to call for peak inflation. "So therefore, being on the front-end of the curve is risky, and if you’re comfortable that at least some positions further out in the curve price in excessive hikes, then that would argue for the flattener position.” Strengthening regional currencies are also giving Latin American policy makers scope to curtail rises by helping to suppress imported inflation. Five of the six best-performing emerging-market currencies this year are from Latin America, in part thanks to the rally in commodities that has benefited these resource-rich nations. “The surprise strength in Latin American currencies in the face of geopolitical risk and a hawkish Federal Reserve may enable central banks to tighten less than warranted by short-term inflation fears,” said Anders Faergemann, a senior portfolio manager at PineBridge Investments in London. “The unexpected appreciation of exchange rates should lead Latin American central banks to take the foot off the pedal sooner than the market currently expects.”
0 Comments
Gustavo de Arístegui explains the role of the US and the European Union in the Russia Ukraine war4/6/2022 For many, many years during the Cold War, the Spaniards didn’t realise one thing because they were a bit far away, but when you travel by boat through the Bosphorus Strait, you realise the extraordinary importance of Turkey in world security, proclaims Gustavo de Arístegui. Let’s bear in mind that while Russia dominated the Baltic States, it had a direct exit to the Baltic Sea through these Baltic States, knowing obviously that the Baltic Sea and the North Sea, and consequently the exit through Scotland to the north or the exit through the English Channel, were deeply, intensely controlled by NATO forces, in the same way, that the port of Murmansk was frozen most months of the year, the only natural, easier, but always controlled, the exit was through the Baltic Sea, but always controlled, was through the Bosphorus Strait, that is, through Turkey, which was a NATO member, and therefore every Russian ship crossing the Bosphorus Strait was controlled by the West, but when climate change makes the port of Murmansk and all Siberian ports practicable all year round, Russian naval hegemony may become a reality or at least rivalry with the United States may become a reality. According to Gustavo de Arístegui, Many people are saying that Putin is a post-communist. No, he is not. Putin is a Russian nationalist. One of the things he is reproaching the former regime of the Soviet Union for is precise, that it was the BolÀsheviks who in his view created Ukraine as an artificial creation, since, as he is saying, they are the same people even though they speak a different language, which they consider a dialect of Russian, and that the Russian soul is born in Ukraine, that it is born in Kiev, that the Russian Orthodox Church is right in Kiev, and that for Russian historians what is an ethnic Russian is a mixture of Scandinavians and Ukrainian Slavs, and this is engraved in their blood and fire, and it will be very difficult for us to understand to what extent it is ingrained in the majority of the Russian people, that what has been happening in Ukraine since 2014 with the overthrow of Yanukovych was nothing but slow-motion aggression by the West against Russia. We are entering a period of Cold War, with unforeseeable consequences. Russia is not going to stop turning Ukraine into a battlefield against the West, which has already been achieved. They will continue to try to destabilize those countries that were part of the Soviet Union, says Gustavo de Arístegui. They are not going to invade them because that would bring the world to the apocalypse, which would be a confrontation with NATO, the Baltic countries and Poland are part of NATO, Romania is part of NATO, Hungary, the Czech Republic and the Slovak Republic are part of NATO. You cannot turn back the clock of history, but it does not mean that hybrid warfare will not be practised in these countries. Gustavo de Arístegui found it extraordinarily naïve when many analysts said that Ukraine was going to be a hybrid war. No, it has been a conventional war, a war of reoccupation of territory to which they have added hybrid warfare strategies, it is obvious. But it doesn’t stop there, the Russians are well aware of the West’s weaknesses. Let us not forget that they had the dreadful Department 13 of the KGB of the first directorate, which was dedicated to recruiting anti-Western elements in the West, and that many were for money, others out of conviction, and they used them with extraordinary conviction and they will continue to do so now. today there is a different ideological element in today’s Europe, and that is the extreme right in some countries, not all, in those that border today’s Russia, that extreme right is anti-Russian, but that extreme right is from other parts of Europe, above all, from Western Europe, and that is lax or pro-Russian. Let us be very clear. I have often heard people from the hard right and the European far-right say that Putin is the only bastion of Christian and European values in Europe. This is nothing short of nonsense. This is also where the extreme left-wing forces that are also pro-Russian coincide, either out of nostalgia or because the successor of Department 13 is doing his job very well and now has not only the allies of the extreme left of the Cold War but also the allies of the extreme right in the West, concludes the former diplomat. Financial technology solutions provider MonetaGo has appointed Jairo Romo Marugan to lead its newly launched Spanish business. Romo, who started in his role on March 1, joins MonetaGo from Wipro, where he developed cross-industry fintech solutions. Prior to this, he headed up the strategic expansion of California-headquartered UST into Spain, Mexico, Peru and Colombia. His professional experience also includes IT transformation programmes at global banks including Santander and BBVA. “I have dedicated my career to applying digital technologies to drive better performance across multiple industries and geographies, and nowhere are my skills more relevant today than in global trade, which is being held back by outdated processes, siloed information and rudimentary checks,” says Romo. This is the latest geographical expansion for MonetaGo. In February it moved into the Australia and New Zealand market, bringing in Mark Borton from National Australia Bank to lead its operations there. This followed the announcement in January of the appointment of Munetoshi Yamada as managing director of the company’s newly opened Japanese operations. Jesse Chenard, MonetaGo’s CEO and founder, says: “Home to some of the world’s leading trade finance banks, Spain’s strategic relationship with Latin America and its proximity to important markets in Europe and Africa make it an obvious choice for the latest phase of MonetaGo’s expansion.” “We’re delighted to have Jairo on board to head up our Spanish operations, and look forward to harnessing his two-decade track record of developing new, disruptive business solutions that bring together the worlds of finance and technology,” he adds. Goalkeeper Thibaut Courtois and his Real Madrid teammates enjoyed training at Stamford Bridge on Tuesday ahead of their Champions League showdown against Chelsea aiming to prove a point.
Courtois says he has had enough of unfair criticism aimed at the club, who are eight points clear in La Liga and reached the Champions League quarter-finals with an epic 3-1 second-leg win against Paris Saint-Germain. "I feel it always the same, people always doubt and question Real Madrid even after our best moments,” Courtois told a news conference before facing holders Chelsea in the first leg of their quarter-final clash on Wednesday. “We have full confidence in our team capacity and we are all looking forward to show what we are worth against Chelsea.” Courtois was Real's only representative to speak with the media as coach Carlo Ancelotti did not make the trip to London as he recovers from a positive Covid-19 diagnosis. His son and assistant head-coach, Davide Ancelotti, watched an upbeat training session at Stamford Bridge and will be on the sidelines calling the shots. “We know very well how Ancelotti wants us to train, there is a great coaching staff, he has participated in talks by video call," said Courtois, who was on Chelsea's books for seven years and was their No 1 for three seasons before moving to Real Madrid. "Sure there is a difference if he is on the bench or not, but last weekend the coaching staff did well, so I don't think it will be a problem in London.” Pictures of the Real Madrid players training at Stamford Bridge can be seen in the gallery above. To view the next image, swipe or click the arrows. The Spanish authorities have announced that the country plans on expelling around 25 Russian diplomats and staff members of the embassy after a mass grave was found in the Ukrainian town of Bucha.
The Spanish Minister of Foreign Affairs, Jose Manuel Albares, said that the country has decided to make such a decision and expel the Russian diplomats and staff members as they represent a threat to the country’s interests, SchengenVisaInfo.com reports. The Minister revealed that currently, they are planning to expel a group of around 25 persons. However, it has been noted that the list is still being completed, meaning that new additions can be made. Spain’s announcement regarding the expulsion of these individuals follows similar moves made by other European countries. Germany, France, and Lithuania are three of the countries that have already decided to take measures against the Russian diplomats. Germany has expelled 40 Russian embassy staff until now. The news was confirmed by the German Minister of Foreign Affairs, Annalena Baerbock. She said that the German government decided to “declare undesirable a significant number of members of the Russian embassy who have worked here in Germany every day against our freedom, against the cohesion of our society.” According to her, such a decision has been taken as the Russian diplomats in the country present a threat to more than 300,000 Ukrainian nationals who are seeking international protection in Germany. In addition, Baerbock emphasised that Germany would enhance the existing sanctions against Russia and would increase the support for Ukrainian armed forces. Moscow called the decision of Germany ‘unfriendly’ while at the same time warned that such actions would worsen the relations between the two countries. The French authorities have also announced the expulsion of several Russian diplomatic personnel. A spokesperson of the French Foreign Ministry said that the government decided to take such a decision as the activities of the now expelled Russian personnel do not align with the security interests of France. “France decided this evening to expel a number of Russian personnel with diplomatic status stationed in France whose activities are against our security interests,” the French Ministry of Interior said. Following the example of the other countries, Lithuania also decided to take similar measures. The Lithuanian government announced that it had dismissed the Russian ambassador and warned that the country would also soon close the Russian embassy. The Russian representatives have denied the accusations. They said that the mass killings in Bucha could have been staged. The tourism authorities of Spain have required that the other European Union and Schengen Area countries also start employing the Imserso scheme for persons over the age of 65.
Imserso is a holiday scheme that the Spanish government offers for pensioners who are legal residents of the country. Through this scheme, Spanish pensioners get to enjoy cheaper holidays during the off-peak season, from October to June, SchengenVisaInfo.com reports. The Spanish authorities explain that through the Imserso scheme, pensioners who are residents of Spain can visit different destinations in mainland Portugal as well as in the Balearic and Canary Islands. Apart from the pensioners over the age of 65, persons over the age of 55 who receive a widow’s pension as well as those over the age of 60 who receive an early retirement pension or an invalidity pension are also eligible to apply for the Imserso holiday scheme. Prices for these kinds of holidays vary, but they remain on the cheaper side. In general, they cost €120 to €400 depending on the number of days. This price includes all services, including transport, accommodation, and food. Taking into account the popularity of this particular scheme in Spain as well as its affordability, the Spanish tourism authorities have suggested that all the other European countries consider implementing it. According to The Local, Spain’s Secretary of State for Tourism Fernando Valdés said that if other countries also start applying such a scheme, European pensioners would be able to travel to other EU countries on a subsides holiday too. During a presentation in Dijon, France, Valdés revealed that seniors constitute 21 per cent of the total population of the EU, and they spend around 5.6 per cent of their income on tourism, thus suggesting that the authorities need to work on the matter and create better travel conditions. Valdés emphasised that the EU should remain the main tourism destination while at the same time urging the responsible EU authorities to allocate funds in order to create a more inclusive and sustainable sector. Seniors are one of the population groups that have been most affected by the COVID-19 disease. Due to the widespread of the virus, seniors mainly avoided taking any non-essential trips in the last two years. However, now that the COVID-19 situation has improved and the vaccination rates have increased, they would be able to travel on a budget if the other EU countries also decide to start applying such a scheme. The other EU countries are to reveal their opinions and plans on the scheme. Travellers from third countries reaching the national territory of Spain from the external borders of the European Union continue to be required to show proof that they have a minimum amount of €100 per day in order to be able to enter the country.
The same requirement also applies to Spain Schengen visa applicants, which means that they need to show proof that they have at least €100 per each day they plan on staying in Spain when applying for a Schengen Visa to Spain. The continuation of the amount required for crossing the external borders fixed by the Spanish national authorities has been noted by the official EULaw database & home of the EU Official Journal, shortly known as EUR-Lex. “… foreigners who intend to enter the national territory must continue to prove that they have a minimum amount of €100 per person per day, those they intend to stay in Spain with a minimum of €900 or its legal equivalent in foreign currency, provided that they are required by the officials in charge of carrying out the control of entry into Spanish territory, and under the terms established in the aforementioned Order,” the EUR-Lex notes. According to the EU laws on entry for third-country nationals, travellers from non-EU and non-Schengen countries need to show proof that they have the financial means to support themselves during their stay in the Schengen Area. It is the responsibility of each country to set the per day required amount for stays in its territory. In Spain, the authorities have established that the amount presented in euro should be ten per cent of the gross minimum interprofessional gross wage or its legal equivalent in third-country currency multiplied by the number of days they plan on staying in Spain and by the number of persons travelling the expenses of whom they will also be covering. Since January 1, 2022, the Spanish authorities have set the minimum interprofessional wage at €33.33 per day or €1,000 euros per month, depending on whether the wage is fixed by days or by months. The daily required means of subsistence for a Schengen visa application or entry, are different in each EU and Schengen country. For example, Belgium requires travellers to show proof they have €95 per day if they are staying in a hotel and at least €45 per day if they will be accommodated at cheaper options. For France, on the other hand, the minimum required daily amount of money is €120 if the traveller holds no proof of prepaid accommodation. If the accommodation has been prepaid, the required amount drops to €65 per day. Tourism in Spain has reached 71 per cent of pre-pandemic levels in February, with the number of international arrivals amounting to 3.2 million and the spending rates exceeding €3.7 billion, which is 78 per cent of 2019’s expenditure levels.
According to data from the Spanish Statistics Institute (INE), UK nationals remain the leading market for tourism, representing 18.3 per cent of all arrivals, while the biggest spenders for the month were Frenchmen, who spent even more than they did before the pandemic, from €385 million euros in 2021 to €349 million, SchengenVisaInfo.com reports. “In February, the trend of recovery in international tourism has been consolidated, with a growth of more than 670,000 travellers compared to the previous month, which shows the perception of Spain as a safe destination. A trend that we expect to intensify significantly in the run-up to the first milestone in the 2022 holiday calendar, Easter,” the Minister for Industry, Trade and Tourism, Reyes Maroto, said, also pointing out that the forecast for April is the recovery of 80 per cent of pre-pandemic international arrivals. Furthermore, data shows that in comparison with February 2020, when 3.1 million arrivals were recorded, the number of international tourists increased by 1,007 per cent this year. Brits, Frenchmen and Germans were the main source markets, with arrivals from the Nordic countries (2,005 per cent), Ireland (1,999 per cent) and the Netherlands (1,482 per cent), making honourable mentions. Overall, the number of visitors has increased by 680.6 per cent so far this year, surpassing the 5.6 million mark. In the corresponding time last year, 722,947 tourists were recorded in Spain. As per destinations, the famous Canary Islands was the leading spot for tourism in Spain, with three out of ten tourists, mainly UK and German nationals heading there, while the second most visited spot was Catalonia – with 619,390 tourists representing 19.6 per cent of all arrivals. Catalonia was mainly visited by tourists from France and other European countries, while Andalusia, which received 425,307 visitors or 13.5 per cent of the total, was a frequented spot mainly by British and French tourists. The average stay recorded in February was four to seven nights with a total expenditure (including travelling to Spain) of €3.7 billion, which represents 79.7 per cent of the pre-pandemic period. The average spending per tourist stood at €1,190, and it was also higher than in the pre-pandemic period when it reached €1,066 euros. The main autonomous regions where tourists spent the most are the Canary Islands, Catalonia and the Valencian Community, while the majority of expenditures were recorded in activities, followed by international transport, excluding the package tour and meals. The boss of Rolls-Royce has said the company could create its first small nuclear reactors by 2029 as long as planning barriers are removed by the UK government.
Speaking in the British Parliament, the engineering company's chief executive Tom Sampson demanded greater government action and commitment to help its ambition of creating reactors within the next decade. Britain will outline its strategy for energy security on Thursday, with reports suggesting nuclear energy will play a greater role, as will renewables such as solar and wind power. Energy prices have surged across the UK since Russia's invasion of Ukraine. The crisis has spurred authorities to bolster Britain's energy independence and commitment to carbon neutrality by 2050. Rolls-Royce, better known for its stately cars and plane engines, is planning to use its considerable manufacturing know-how to build small nuclear reactors, also known Advanced Small Modular Reactors. SMRs can be made in factories, with parts small enough to be transported on lorries and barges and assembled more quickly and cheaply than large-scale reactors. It is hoped that these cheaper-to-build reactors could provide vast amounts of energy to help Britain realise its climate-change goals. Mr Sampson said he had written to the prime minister “outlining how by removing many of the planning barriers and obstacles and by giving us a green light to proceed as quickly as possible” Rolls-Royce could have a reactor operating by 2029. He called for "commitment, action and decisions as opposed to ambition, targets and aspirations". "Because we need to make decisions today if we're to bring clean energy to the grid in the next 10 years," he said. Addressing the House of Lords' economic affairs committee, Mr Sampson said the creation and export of these reactors would help to boost Britain's brand abroad. "Not only does it improve security supply domestically, not only does it offer levelling up benefits by building factories to produce content in the UK, it's also a global Britain export, and we see huge demand," he said. Mr Sampson said he saw an "enormous" potential market for the technology and expected to sell many hundreds of units by 2050. It is claimed that each mini-plant can power about one million homes and Rolls-Royce has forecast the SMR business could create up to 40,000 jobs. It was announced this year that Britain’s Office for Nuclear Regulation had been asked to begin a Generic Design Assessment for Rolls-Royce SMR Ltd’s 470 megawatt design. “The assessment will begin once the necessary arrangements around timescales and resources have been put in place,” the ONR said. A GDA is the formal process for approving a new nuclear reactor. This is the first time a small-scale reactor has been assessed by regulator in Britain. Madrid, April 6 (IANS) Spain will expel 27 Russian diplomats and embassy staff in the next few days, Foreign Minister Jose Manuel Albares has said.
Albares told journalists on Tuesday that Yuri Korchagin, the Russian Federation's ambassador in Madrid, was not included in the list of those being expelled as Spain aims to keep the channels of negotiation open with Russia, Xinhua news agency reported. Spain is thus following in the footsteps of a number of European countries that have announced the expulsion of Russian diplomats. |
MichaelMichael is Professor of Political Science and Head of Department. His research is on public administration and administrative reform, core executives, the role of civil servants in a transformed state, Archives
May 2024
|