Emerging markets remain under pressure - NBF

Krishen Rangasamy, an analyst at NBF Economics and Strategy noted that Emerging markets remain under pressure.

Key quotes:

"Turkey’s economic crisis has potential for contagion, with foreign investors pulling out capital in search of safe havens. The accompanying U.S. dollar strength can indeed lead to a vicious cycle by making it harder for borrowers to service USD-denominated debt, reinforcing default risks and hence leading to more capital outflows from emerging economies."

"A weaker-than-expected handoff from last year, courtesy of recent data revisions, prompt us to marginally trim our 2018 GDP growth forecast for the U.S. to 2.9%. That, however, by no means diminishes the current state of the world’s largest economy which remains buoyant thanks in part to fiscal stimulus which has re-energised domestic demand. Price pressures are not surprisingly intensifying, forcing the Federal Reserve to tighten policy. The Fed, however, will exercise restraint amidst the U.S. dollar’s persistent strength, escalating trade protectionism and the possibility of an inverted yield curve."

"A strong performance in the second quarter leaves Canada’s economy with little to no slack. With the housing market having seemingly shaken off the effects of tighter macro prudential measures, the Bank of Canada can now more confidently tackle mounting inflation pressures with tighter monetary policy. We continue to expect real GDP to grow 2% this year, although our call for 1.9% growth in 2019 assumes Canada can avoid tariffs by striking a new trade deal with the U.S."