(Bloomberg) -- Emerging-market currencies and stocks fell for a fourth straight week last week, the longest losing streak for equities since October, amid mounting concern about a global slowdown. The inversion of the U.S. yield curve for the first time since 2007 fueled fears of a recession, outweighing relief over a pause in the U.S.-China trade war. Argentina led declines after market-friendly President Mauricio Macri was trounced in a primary election.
The following is a roundup of emerging-markets news and highlights for the week ending Aug. 18.
Read here our emerging-market weekly preview, and listen to our weekly podcast here.
On Wednesday, 10-year Treasury yields fell below the rate on 2-year notes for the first time since 2007. The yield-curve inversion sent ripples through financial markets amid concerns over a possible recession in the U.S.President Donald Trump delayed the imposition of new tariffs on a wide variety of Chinese consumer products including toys and laptops until December. The pause in his fight with China came as senior officials on both sides had their first phone conversation since Trump threatened the tariffs at the beginning of this monthTrump said Thursday he had a call coming soon with China’s President Xi JinpingChina called planned U.S. tariffs on an additional $300 billion of Chinese goods a violation of accords reached by the presidents, vowing retaliation as Beijing also pushed back on Trump’s efforts to link the trade war with the turmoil in Hong KongChinese officials are sticking to their plan to visit Washington in September for face-to-face trade meetings, people familiar with the matter saidChina posted the weakest industrial output growth since 2002 in July, as a cyclical slowdown and trade tensions add to the case to roll out more stimulusThe People’s Bank of China has responded to downward pressure on the renminbi exchange rate by communicating with the media and market participants to keep the rate “basically stable,” Deputy Governor Liu Guoqiang writes in a Financial Times opinion pieceYuan won’t see disorderly weakening despite external shocks, including trade frictions, according to an article written by PBOC Deputy Governor Pan GongshengChina’s central bank said it’ll start releasing a new reference rate for bank loansArgentine Economy Minister Nicolas Dujovne resigned Aug. 17, a day after Fitch Ratings cut Argentina’s long-term issuer rating by three notches to CCC and S&P lowered the country’s sovereign rating to B- from B and slapped a negative outlook on itMacri will meet new designated economy minister Hernan Lacunza and central bank President Guido Sandleris, according to a spokesman from the presidential palaceStocks, bonds and the currency all sold off ahead of the downgrade amid the prospect of market friendly Mauricio Macri losing power in October’s presidential electionAssets rebounded Thursday after a brutal three-day sell-offThe rout, that took sovereign bonds and the currency to a record low, hit big funds, including Pimco and star bond manager Michael HasenstabHong Kong’s airport halted check-ins for remaining departures for a second straight day on Tuesday as embattled local leader Carrie Lam warned that the city risked sliding into an “abyss”Investors are getting anxious about the impact of 10 weeks of anti-government demonstrations on Hong Kong’s banksChina ramped up the rhetoric against the protesters, with mainland officials in the city saying they “acted like terrorists” in swarming the main terminal buildingsBrazil’s central bank announced it will sell dollars from its foreign reserves for the first time in more than a decade to meet spot-market demandCentral bank will also offer reverse currency swaps -- the equivalent of buying dollars in the futures market -- to cancel out the impact selling dollars would have had on the realPlan was welcomed by traders who say the move will help meet market demand without disrupting the outlook for the currencyThe Moscow City Court released French investor Philippe Delpal from jail to house arrest after prosecutors unexpectedly dropped their opposition in a closely watched case that’s become a thorn in relations between Russia and France
The People’s Bank of China is “close” to issuing its own cryptocurrency, according to a senior officialSouth Korea moved to downgrade Japan from its list of most trusted trading partners while also seeking talks to end a months-long spat that has hurt economic ties between the two American alliesSouth Korea is not considering curbs on DRAM supply to Japan as part of corresponding measures against Japan’s export restrictions, President Moon Jae-in’s spokeswoman Ko Min-jung saidBank Indonesia said there is still space for a policy rate cut, while the economy continues to perform well despite strong external headwindsIndonesia’s economy is set to expand at the fastest pace in seven years in 2020 with growth of 5.3%, President Joko Widodo said Friday in his annual budget speechWidodo sought parliament’s approval to relocate the nation’s capital to the island of Borneo, home to some of the world’s biggest coal reserves and orangutan habitats, as he seeks to ease pressure on congested and polluted JakartaWidodo said laws hindering the nation’s progress must be scrapped to boost economic growth, signaling his intention to push on with an ambitious nation-building agenda in his second termPresident proposed record government spending next year to drive the economy to its quickest projected growth in seven yearsThai Industry Minister Suriya Juangroongruangkit said he is satisfied with the Bank of Thailand’s currency management and that the baht strength reflects a high current-account surplus. He also said the central bank can’t intervene much as Thailand could then be criticized for being a currency manipulatorPrime Minister Prayuth Chan-Ocha wants the baht to be at the level that the country’s exports can compete, Narumon Pinyosinwat, the government’s spokeswoman, saidBank of Thailand Governor Veerathai Santiprabhob said a planned policy-coordination committee with the Ministry of Finance won’t affect the central bank’s rate decisionsThailand plans a 316-billion-baht ($10 billion) package of government spending and loans to counter an economic slowdown caused by the U.S.-China trade war and currency strengthIndia Prime Minister Narendra Modi has hit back at critics of his government’s decision to revoke Kashmir’s autonomy, saying its special status had only led to terrorism and corruptionHe also announced a new position of Chief of Defence Staff, saying the move will “sharpen coordination” between the army, navy and air force servicesIndia’s consumer prices rose 3.15% in July compared with 3.18% in June, while wholesale-price gains slowed more-than-expected to 1.1% from 2% the prior monthFurther reduction in Philippines lenders’ reserve requirement ratio is a live discussion in Monetary Board, central bank Deputy Governor Francis Dakila told ABS-CBN News ChannelForeign direct investments net inflow was at $242 million in May, down 85.1% from last yearMalaysia’s economic growth quickened in the second quarter, spurred by stronger domestic demand and a rebound in commodity prices; gross domestic product expanded better-than-expected 4.9% in the second quarter from a year ago, the strongest expansion since early last yearThe central bank announced further steps to increase market liquidity, ahead of an expected decision by FTSE Russell in September on whether to retain ringgit bonds in its indexInflation slowed to 1.4% in July on year from 1.5% in JuneThe European Union opened a probe into whether Chinese, Taiwanese and Indonesian exporters of flat-rolled stainless steel sell it in Europe below costTaiwan Premier Su Tseng-chang asked central bank governor Yang Chin-long to closely monitor global financial markets amid China-U.S. trade conflict and uncertainties surrounding Hong KongTaiwan plans to spend a record amount on national defense next year as President Tsai Ing-wen looks to bolster the island’s defenses in the face of threats from an increasingly assertive China
Russia’s economy expanded 0.9% in the second quarter as consumer demand remained weak, but mining and manufacturing showed a modest pickup. The Economy Ministry said the pace will accelerate in the second half of the yearRussia’s credit score at Fitch Ratings is back to where it was before the crisis in Ukraine almost half a decade ago, but uncertainty over U.S. penalties still stifles the nation’s rankingThe European Union’s eastern economies downshifted last quarter along with the rest of the bloc, but a job boom and stimulus helped them withstand the brunt of global headwinds that sent the U.K. and Germany into contractionUkraine’s economic growth unexpectedly accelerated to the fastest pace since 2016, helped by a strong grain harvest and domestic consumptionThe Turkish government plugged its deteriorating finances in July with an outsized cash infusion from the central bank. The monetary authority transferred around 22 billion liras ($3.9 billion) to the Treasury last month, the biggest deposit since an annual dividend payment in January, according to data on its websiteSouth Africa’s rand was back as the world’s most-volatile major currency on Thursday, with options pricing suggesting it’s not going to lose that status any time soonRetail sales rose for the sixth straight month in JuneMozambique’s central bank cut its key rate for a second time this year as the inflation outlook improved following a new peace deal. The Monetary Policy Committee reduced the benchmark interbank rate to 12.75% from 13.25%, Banco de Mocambique said Thursday
Argentina’s presidential front-runner Alberto Fernandez criticized Macri for increasing short-term debt to unsustainable levels, although he said he doesn’t want to default on the country’s obligationsMacri tweeted Wednesday that he had a long phone conversation with Fernandez, who committed to collaborate so that political uncertainty affects the economy as little as possibleThe drastic change in the political outlook had analysts and traders scrambling to re-calculate the fair value for Argentine assets. Bank of America Merrill Lynch calculated the recovery value for the sovereign bonds at around 40 cents on the dollar in case of a restructuring in 2020Macri announced measures to support the economy, including freezing fuel prices for 90 days, increasing the minimum salary and modifying taxes paid by workersInvestors now focusing on incoming T-bills rollovers, as government may struggle to find demand for new notesArgentine savers pulled more than $700 million from their dollar-denominated accounts on Monday and TuesdayBrazil’s economy likely fell into recession in the second quarter according to a key gauge of economic activityThe lower house of Congress approved the base text of a measure aimed at reducing bureaucracy and restrict the regulatory power of the state. Speaker Rodrigo Maia said the tax reform can be approved by the end of the yearBrazil will leave the South American trade bloc Mercosur if conflicts arise with the winner of Argentina’s election, President Jair Bolsonaro saidMexico’s central bank reduced borrowing costs for the first time in five years after inflation slowed, the economy faltered and the U.S. cut its own ratePresident Andres Manuel Lopez Obrador wants to upgrade ports and refineries to help trigger growth at the Isthmus regionLower revenue will drive a wider-than-anticipated fiscal deficit this year, despite underspending, according to Moody’s Investors ServicePemex’s business plan is expected to weaken its credit metrics, Fitch saidLopez Obrador ratcheted up his attacks against credit-rating companies on Friday, saying he hopes they act more objectively and noting that Mexico pays them as much as $300 million a yearA Mexican judge ordered the detention of a former cabinet minister facing corruption chargesColombia’s economy grew more than expected in the second quarter, as the retail, wholesale and transport sector expanded along with the financial industryPeru economic activity exceeded expectations in JuneCentral bank increased currency intervention, selling three times more foreign currency swaps than in previous time
--With assistance from Julia Leite, Yumi Teso, Alex Nicholson and Philip Sanders.
To contact Bloomberg News staff for this story: Lilian Karunungan in Singapore at email@example.com;Aline Oyamada in Sao Paulo at firstname.lastname@example.org;Selcuk Gokoluk in London at email@example.com;Colleen Goko in Johannesburg at firstname.lastname@example.org
To contact the editors responsible for this story: Tomoko Yamazaki at email@example.com, Karl Lester M. Yap
For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.