(from my colleagues Dr. Win Thin and Ilan Solot)

The week starts off subdued for EM, but selling pressures continue for the most part.  The dollar is mixed against majors and with the decision about the timing of the first Fed hike still up in the air, it’s hard to see how investors will commit a lot of capital into year end.  The softer tone in commodity price is also not helping EM.  Still, it seems like the panic sentiment towards EM has subsided, opening the door for more differentiation amongst markets and bottom picking in assets that have been aggressively sold.

China’s weekend data deluge was mixed, but we think it was the right kind of mix to avoid roiling markets.  The PBOC likely has some easing left to do, and so we would characterize China as neutral/positive risk for global markets. Brazil offers the usual mix of negative news headlines, which we would characterize as posing mostly negative risk for global markets.

Taiwan reports September export orders Tuesday, and are expected at -11.4% y/y vs. -8.3% in August.  It then reports September commercial sales (-4% y/y expected) and IP (-5.4% y/y expected) on Friday.  The economy is slowing, and so policymakers are likely to continue stimulus measures.  The central bank should continue easing at its quarterly policy meeting in December, while the government will likely use fiscal stimulus ahead of the January elections.  The ruling KMT party replaced its presidential candidate over the weekend.

Hungary central bank meets Tuesday and is expected to keep rates steady at 1.35%.  Deflation risks are persistent, with CPI at -0.4% y/y in September.  If the economy continues to slow, we think the easing cycle could be restarted.  The bank has been on hold since the last 15 bp cut to 1.35% back in July, but real interest rates have been rising since June.  Minutes to this meeting will be released November 4.