(from my colleague Dr. Win Thin)

EM ended last week on a soft note, and that weakness seems likely to carry over into this week. Dollar sentiment turned more positive after firm retail sales data on Friday, though US rates markets have yet to reflect any increase in Fed tightening expectations. Over the weekend, China reported weaker than expected April IP, retail sales, and fixed asset investment. This continues a string of weak data for the month, and will undercut notions that the world’s second largest economy is stabilizing.

Country-specific risks remain in play. Brazil markets are showing some “buy the rumor, sell the fact” price action after the Senate voted to continue the impeachment process. Weak economic data suggest that incoming Finance Minister Meirelles will inherit a terrible mess. Poland avoided a downgrade by Moody’s over the weekend, but the outlook was moved to negative and points to a likely downgrade ahead. Turkey and South Africa continue to face downgrade risk as well.

Thailand reports Q1 GDP Monday, with growth expected to remain steady at 2.8% y/y. Growth remains sluggish, but the Bank of Thailand has put the onus of stimulus on fiscal policy. CPI rose only 0.1% y/y in April, which gives the central bank leeway to cut rates if the economy slows in H2. Next policy meeting is June 22, no move is seen.

Colombia reports March retail sales and IP Monday. The former is expected to rise 3.4% y/y and the latter 6.6% y/y. Central bank minutes showed a unanimous vote to hike rates in April. A majority voted for the larger than expected 50 bp, while a minority favored a smaller 25 bp hike. Next policy meeting is May 27 and further tightening then is possible if peso weakness continues.

Singapore reports April trade Tuesday. NODX are expected at -7.4% y/y vs. -15.6% in March. Data have been coming in soft in recent months, justifying the MAS decision to loosen policy at its April policy meeting. Next meeting is in October. While we think the MAS has a dovish stance, it’s too early to say if it will ease again then.