Birdwatching

Macro Man's been birdwatching, and this evening he's seen another pink flamingo through his binoculars: emerging market fixed income. Ten year swap yields in Mexico have exploded higher, but actually look relatively well-behaved in comparison to other EM yield curves. Today's price action has the whiff of panic, so who knows how far how fast this stuff will move.
Macro Man will be at a conference on Thursday and Friday so may or may not post. He will, however, follow the comments; readers should feel free to use the comments suggestion as a forum for non-spam, non-troll dialogue.
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FR
admin
October 22, 2008 at 9:27 PM ×

Hey MM,

Yes, EM is collapsing and exploding - all at the same time - in terms of FX and rates (not to mention spreads). Along with LatAm comes Eastern Europe, where rates are coming up in expectations that CB will defend their currencies vigorously. This along with the USD rally makes EM a sad place.

BTW: what are the inputs in your Equit model? Or could you point me to the post in which you described how you built it? I remember there was one a while, but don't know when.

Thanks!

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Anonymous
admin
October 23, 2008 at 1:33 AM ×

TRY aka the bird

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Anonymous
admin
October 23, 2008 at 9:09 AM ×

Don't forget that the Argentinian government is openly considering taking over (natiopnalising) private pensions. Argentinian bond yileds are rising sharply as a result (2033 bond yields up 262 bp to 29.33%). This must be having an effect on Mexican bonds and EM markets in general. IB

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vlade
admin
October 23, 2008 at 11:04 AM ×

And something entirely different:
http://newsbiscuit.com/article/poland-overwhelmed-by-influx-of-british-investment-bankers-379

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October 23, 2008 at 1:49 PM ×

I would say MXN and BRL are pinker and flamingoer than TRY, but it definitely looks like EM is taking it on the chin

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Anonymous
admin
October 23, 2008 at 6:32 PM ×

MM, i'd be curious to see what the drobny guys have to say about SGD.

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Anonymous
admin
October 24, 2008 at 10:02 AM ×

Hi MM,

it's the same old story, pal: you're not at your desk and EUR/USD plunges below 1.26, GBP/USD is trading a few inches above 1.56 and USD/JPY is currently below the 95.00 mark... Your holidays and/or meetings are definitely becoming a reliable volatility indicator...

Joking aside, is a new Plaza in sight by G7 (sorry, G20 ...or G21 if Spain is included?) on November 15th?

Have a nice day, AT

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October 24, 2008 at 11:02 AM ×

Not that Zapatero is anything but irrelevant , but you have to note the really cheap parting shot levelled at him by Bush.

Politicians...

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Anonymous
admin
October 24, 2008 at 12:19 PM ×

Today Sick-trader is feeling very sick, looking at the dismal liquidation on mkts. Is there any further downside to sentiment? what is this week end bringing in term od good/bad surprises? how much of this selloff in EQt is due to short or to indirect hedging of illiquid assets? Are we going to see a big rebound anytime soon? many questions, no answers

sick trader

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Anonymous
admin
October 24, 2008 at 1:24 PM ×

Haha good point AT. I wish Roubini would shut up, now he's just being irresponsible. OK deleveraging we get it, but this is just silly. Any one got any colour on liquiditiy / volumes, esp in FI/FX?
Cheers, and good luck, JL

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October 24, 2008 at 1:55 PM ×

Sick Trader -

Aside from this all not being a sentiment issue at all, you'd think (hope) that some deep pocketed buyers will show up after the dust clears from the futures re-start.

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Anonymous
admin
October 24, 2008 at 3:12 PM ×

Hoping to lighten the tone slightly, check out this link:
http://www.amazon.com/gp/reader/1893958701/ref=sib

Oops!

Good weekend to all.

CT

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Anonymous
admin
October 24, 2008 at 3:31 PM ×

MM -- will you now concede that emergency lending measures can stop a "run on the bank" if the bank is basically solvent...

...but the major money center banks in the U.S. and Europe were not, and are not, solvent.

No amount of "emergency" liquidity is going to change insolvent and poorly managed banks into economically viable entities.

The sooner the markets accept this fact and let the incompetent (even if politically connected) fail -- the sooner we can begin rebuilding the world economy.

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Manc Trader
admin
October 24, 2008 at 4:33 PM ×

what's with the fed at citadel rumours?
Anyone hear anything?

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Anonymous
admin
October 24, 2008 at 6:52 PM ×

Citadel Denies Collapse Rumors
October 24, 2008

Citadel Investment Group moved quickly to squelch rumors on Wall Street that the giant hedge fund was in serious trouble.

“Categorically false,” a spokeswoman for the Chicago firm told the Wall Street blog Dealbreaker. “Citadel continues to invest and operate business as usual across the globe. The firm’s liquidity remains strong with more than 30% of investment capital held in cash.”

According to the rumors, both the Federal Reserve and U.K. Financial Services Authority were in Citadel’s offices today, discussing how to handle the collapse of the $20 billion alternative investments giant. The Citadel spokeswoman also denied that the firm was seeking access to the Fed’s discount window.

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Anonymous
admin
October 24, 2008 at 8:09 PM ×

Next Pink Flamingo, 30y Treasury??? If EM needs USD...

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