EMFX Macro – 2024 Update

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Image generated by DALL-E (the first 7 iterations were worse I promise)12th Jan 2024Personal UpdateThis is my first EMFX macro note for many months. In the second half of 2023, I joined Argo Capital Management, which is an EM-focused Hedge Fund. With their consent, I will write occasional personal views on the market. Argo invests in a range of EM assets from liquid macro-driven EM investments, such as those I discuss in these notes, to distressed debt. In past organisations, I’ve typically been the EM-focused member of a Macro business. Here at Argo, I’m on the more liquid-macro side of an EM business. I look forward to the experience.Subscribe nowThis note contains:Brief H2 2023 reviewEarly thoughts on 2024Current trading viewsThoughts on TurkeyUpdated monitorsBrief H2 2023 reviewGiven the time since my last note, I'll touch on the biggest moves from the intervening period. In my late summer notes, I talked about a more challenging H2 with the presence of easing EM central banks and a deteriorating growth outlook in China. As Q3 progressed, dynamics in US fixed income began to produce a considerable headwind for EM assets. Growing budget deficits, the absence of a clear end to the Fed tightening cycle, alongside a heavily inverted yield curve led to a sharp repricing of US term premium. Rapidly rising US 10-year yields came alongside a strengthening US dollar and provided a toxic mix for EM currencies. Signs that the US unemployment rate had troughed, along with some better news on US inflation towards the end of the year culminated in the Fed calling time on the hiking c…