(Bloomberg) -- The stocks rout that began in the U.S. pushed emerging-market equities to a third weekly decline, while their currencies edged higher as Treasury yields came off their peak.

Highlights for the week ended Oct. 12:

  • President Donald Trump slammed the Federal Reserve as “going loco” for its interest-rate increases this year in comments hours after the worst U.S. stock market sell-off since February
  • U.S. Treasury Department’s staff have advised Secretary Steven Mnuchin that China isn’t manipulating the yuan, according to two people familiar with the matter; earlier in the week, a senior Treasury official said the Trump administration is concerned about the Chinese yuan’s depreciation as the Treasury Department weighs whether to name China a currency manipulator in a report
  • U.S. Secretary of State Michael Pompeo cited “fundamental disagreement” with China’s foreign minister during a testy exchange in Beijing
  • Trump and Chinese leader Xi Jinping have agreed to meet next month at the G-20 summit in Buenos Aires in hope of resolving their intensifying trade conflict, Washington Post reported
  • The International Monetary Fund cited trade tension and stresses in emerging markets as it cut its global growth projections for the first time since July 2016
  • Turkish lira was the best-performing emerging-market currency as a court in Izmir released U.S. Pastor Andrew Brunson for time already served, removing a key source of tension between Turkey and the U.S.
  • Indian Prime Minister Narendra Modi’s government is considering tapping Indians living overseas to lure foreign exchange flows and prop up a sagging rupee, according to people with knowledge of the matter


  • China’s Shanghai Composite Index had its worst week since February and fell to a 4-year low; the nation posted a trade surplus of $31.7 billion in September, more than the median estimate $19.2 billion, and the $26.7 billion surplus the previous month
    • An indicator produced by a Beijing-based business school in the style of the closely-watched purchasing managers index plunged last month, adding to concerns about the slowing economy in China
    • The nation shows its strength, selling $3 billion of dollar bonds in “very weak” market
  • Trump said he and North Korean leader Kim Jong Un have “made incredible progress” on negotiations over Pyongyang’s nuclear weapons program and are considering three to four locations for a second summit that would take place after the November midterm elections
    • North Korean leader Kim offered to allow inspectors into dismantling missile engine test site and Yongbyon nuclear facilities in return for end of war declaration
    • South Korea posted current-account surplus of $8.44 billion in August, compared with excess of $8.76 billion in July
  • Indian rupee halted a six-week losing streak while the Sensex index also rallied; India has all options, including sale of bonds to non-resident Indians, on the table in order to deal with current-account gap and the rupee, a government official told reporters in New Delhi, asking not to be identified
    • Indian consumer prices rose 3.77% Y/y in Sept., below estimate of 4.02%
    • Demand in India’s economy may be cooling, according to the central bank surveys
  • Thai baht was the best performer among Asia’s emerging currencies; Thailand’s economy is solid enough to handle an interest-rate increase and expectations of tightening this quarter are already partially reflected in the strength of the baht, according to the central bank
    • A general election will be held in February, Prime Minister Prayuth Chan-Ocha told Japan Premier Shinzo Abe during a meeting in Tokyo, according to a government statement
  • Indonesian rupiah declined a 4th straight week; Bank Indonesia is adopting tighter monetary policy in response to rising risks from global economic developments but is complementing that with accommodative macro policies, according to Governor Perry Warjiyo
    • Indonesia will start a domestic non-deliverable forward market next month as part of its efforts to defend its currency
    • The U.S. “needs to be very mindful that spillover from the effect of their policies is very real for many countries,” Finance Minister Sri Mulyani Indrawati said
  • Malaysian ringgit dropped a third week; the nation will devise new taxes soon to shore up a state budget that’s been constrained by debt and changes to the consumption levy, Prime Minister Mahathir Mohamad said
  • Philippines stock exchange PSEi index extended a six-week losing streak; the central bank is ready to tighten monetary policy further to rein in prices and support the currency if needed, Deputy Governor Diwa Guinigundo said
    • GDP growth will be 6.5 percent in 2018 as investment and infrastructure spending help counter the impact of higher interest rates, said Finance Secretary Carlos Dominguez
    • The country posted a trade deficit of $3.51 billion in August, compared with shortfall of $3.55 billion the previous month
  • Taiwan’s benchmark Taiex index had the worst week in eight months while the Taiwan dollar fell to a 19-month low; the island’s leader Tsai Ing-wen cautioned China against any efforts to interfere in local elections next month in a toughly worded speech


  • Turkish government has told U.S. officials that it has audio and video recordings that prove Washington Post columnist Jamal Khashoggi, a Saudi government critic, was killed inside the Saudi consulate in Istanbul this month, Washington Post reported, citing unidentified U.S. and Turkish officials
    • Incident is prompting some global business leaders to back away from the "Davos in the Desert" event scheduled to take place in Saudi Arabia this month
    • Nation’s posted its biggest monthly current account surplus on record in August, the first time there was no deficit since September 2015
    • Banks will start cutting rates by 10 percent on some outstanding loans, Treasury and Finance Minister Berat Albayrak said
    • Borsa Istanbul 100 Index went from being among the worst-performing global benchmark last week to among the best in dollar terms, climbing 5.5%
  • U.S. Treasury Secretary Steve Mnuchin said Rusal sanctions targeted billionaire Oleg Deripaska and not companies
    • Russia’s Finance Ministry said budget surplus widened this year; current-account surplus also widened in 3Q, according to central bank figures
    • Russia’s MOEX index trimmed its weekly decline to less than 2 percent, still the steepest slump since July; Gazprom, Lukoil and Rosneft were the biggest drags on the benchmark this week as Brent crude slumped 5%
  • South African rand was among the best performers; President Cyril Ramaphosa appointed former central bank Governor Tito Mboweni as his finance minister
    • A parliamentary panel will submit its findings on possible constitutional amendments to ease expropriation of land without compensation to the National Assembly at the end of November
    • South Africa’s benchmark FTSE/JSE All Share Index retreated for a third week; bank stocks regained their poise Friday and might have had a better week amid the positive reaction to the appointment of Mboweni as finance minister, were it not for the global market turmoil
  • Nigerian President Muhammadu Buhari issued an executive order seeking the return of cash held in offshore accounts within 12 months with a 35 percent levy, his office said

Latin America:

  • Brazilian real rallied for second week after Jair Bolsonaro, a right-wing Congressman, stormed to a big lead in the first round of the presidential elections on Oct. 7; second-round vote will take place Oct. 28
    • Bolsonaro commands 58 percent of the voter intentions in latest Datafolha poll, far ahead of Workers’ Party candidate Fernando Haddad, who came in at 42 percent; Ibovespa stock index also climbed a second week
    • Retail sales rose more than expected in August on the back of broad-based gains in all but one sector surveyed
  • Mexico’s peso lagged peers; Senator John Cornyn, the No. 2 Republican in the chamber, said there will need to be lots of consultations on a bill to implement the new trade agreement between the U.S., Canada and Mexico
    • Annual inflation accelerated for the fourth straight month in September, moving further above the central bank’s target on the back of surging energy costs
    • Mexico’s benchmark IPC index retreated for a second week while the TIIE swap curve fully priced out chances of easing over the next 12 months
  • Argentine peso posted the best performance among Latam currencies; market sentiment continued to improve as central bank’s benchmark 7-day Leliq rate stayed above 72%, which bolstered confidence in policymaker’s ability to bring inflation under control
    • Merval stock index extended losses for a third straight week, falling more than 4 percent
    • READ: Five Signs That the Worst Is Over for the Argentine Peso
  • Colombian peso fell the most among emerging-market peers amid oil price drops and the central bank’s reserve accumulation program
    • The biggest risk to Latin America is capital outflows and BanRep’s program to sell put options is "designed to buy reserves cheaply", according to Governor Juan Jose Echavarria
    • Colombia hasn’t suffered outflows in September though it would be wise to increase buffers and prepare for "rough times" over the next two years, Echavarria said

Upcoming data:

--With assistance from John Viljoen.

To contact the reporters on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net;George Lei in New York at glei3@bloomberg.net;Alex Nicholson in Moscow at anicholson6@bloomberg.net

To contact the editors responsible for this story: Tomoko Yamazaki at tyamazaki@bloomberg.net, Philip Sanders

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