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The RCEP trade deal advances at the expense of TPP
Weekly investor research
12 December 2016
Sixteen nations in the Pacific region are advancing towards a trade deal, which includes China and excludes the US. While domestic political pressures are forcing the US away from its traditional commitment to freer trade, the majority of countries in the Pacific region continue to recognise that free trade is good for growth. China in particular stands to gain from US introversion, in our view. In other news, inflation is falling in both Brazil and Russia, which bodes well for local currency bonds in 2017. In Argentina, Macri’s honeymoon is well and truly over as Peronists impose a deeply myopic and ultimately economically destructive fiscal reform upon his administration. Ecuador assuages near-term payment concerns with an attractively priced bond. In China, more signs that the economic upswing is taking root with better trade data and higher inflation. Colombia’s fiscal reform advances, consumer sentiment soars in Philippines and Park is impeached in Seoul. India’s RBI keeps cool in the face of a mini-storm over de-monetisation and Mexico successfully auctions more oil fields. In the global backdrop, attention shifts from the ECB to the Fed as oil prices rise.