23 Aug 2013
Flash: Market behavior adjustming to new reality - Nomura
FXstreet.com (Barcelona) - According to Nomura Strategists, market behavior is going through an important adjustment to the new reality of a reduced Fed backstop.
Key Quotes
"We remain concerned that a final spike in UST yields, if Larry Summers is nominated as the new Fed Chairman may cause a further leg of EM FX weakness. And since we do not think this is not yet fully priced, we are reluctant to be too early with any long trades."
"Overall valuation has improved somewhat for EM, and will become relevant once again once markets settle. Therefore, for now we remain on the sidelines from a structural perspective, waiting for these themes to play out and for markets to settle."
"The adjustment in USTs may not be over and the flow dynamics remain negative. In addition, there are plenty of unknowns associated with unwinding QE. Hence some degree of caution remains warranted."
Key Quotes
"We remain concerned that a final spike in UST yields, if Larry Summers is nominated as the new Fed Chairman may cause a further leg of EM FX weakness. And since we do not think this is not yet fully priced, we are reluctant to be too early with any long trades."
"Overall valuation has improved somewhat for EM, and will become relevant once again once markets settle. Therefore, for now we remain on the sidelines from a structural perspective, waiting for these themes to play out and for markets to settle."
"The adjustment in USTs may not be over and the flow dynamics remain negative. In addition, there are plenty of unknowns associated with unwinding QE. Hence some degree of caution remains warranted."