Friday, March 03, 2006

Emerging Markets continue on a roll

Brazil and Chile in recent weeks have both eliminated the tax on foriegners holding bonds. Brazil this week recieved an upgrad from S&P (two steps away from investment grade). The Merval (the Argentinian stock Exchange) made new highs today. All in all it is a signal to me to stay invested in Latam EM. A story making the rounds recently has been the elimination of the Quantitative easing by Japan. This is in the process of happening and by looking at Japanese interest rate futures rates are begining to rise. Last night a key number was released CPI. After many, many, many years of deflation we are begining to see the signs of inflation reappearing. So what does the market do but SELL YEN. Buy the rumour sell the fact. I do see rates in Japan heading higher but VERY VERY VERY slowly. The last thing that the Japanese government wants is to stall their revovery before it grabs hold (they have done this in the past).

These are the FX Trading Ideas for today.



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