Dan | Income, Investing & Planning

China’s mortgage relaxation spurs weekend sales in mega city as existing home sales for Beijing and shanghai doubled over the weekend from the previous one despite the challenging economy. The fresh round of stimulus is likely to help limit but not revive the property demand. Oil holds near highest since November as OPEC+ tightens market and oil executives are surprisingly optimistic on Chinese demand despite their economic woes. Additional support for crude prices came from speculation that the fed is going to finish their rate hikes. Heavy rains threaten China’s rice crop in latest weather worry which adds on to the ongoing woe driven by India’s rice curb and tightened supply globally. Thankfully for China, they managed to harvest a bigger early rice crop this season despite extreme weather in June. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

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Regional banks are getting ready for a wave of bond issuance to meet new capital requirements in response to the failure of SVB and Signature Bank. Thankfully for the banks, the average borrowing cost for high grade firms broadly eased this week after yields fell. Rice market shows strain after India’s 6-week campaign of curbs with prices jumping back near the highest level in almost 15 years. The market is now dealing with the risk of Thailand and Vietnam imposing their own curbs which would push price further up beyond current levels. Italy moves to weaken China ties without upsetting Beijing as Italy prime minister will be meeting Chinese foreign minister to discuss the possibility of leaving the belt and road initiative. Part of the reason for Italy’s exit has been pinned on the worsening trade deficit. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

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Economist are trimming their expectation for China’s growth from 5.2% to around 4.5% and are predicting more monetary policy easing. At the moment, the market is projecting a 10 basis point reduction in 5 year loan prime rate despite the government keeping it unchanged last week. Iron ore’s prices unexpected rallied and has managed to stay above $100 for the most of 2023, signalling pockets of strength still existing within a gloomy economic outlook in China. A plausible explanation for this lies in the surging railway investments which stands at a decade high this year. Yen is expected to retreat to 1990s levels if BOJ continues to stay dovish and remains far from hiking rates. The markets are expecting a yen rally that has failed to materialize as central bankers maintained their cautious approach. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

China’s 5.5% Stock rally fizzles in blow to market rescue efforts as foreign funds accelerated their selling through the day. While Beijing is ramping up its campaign to lift its market sentiment, foreign investors are not buying it and are losing their patience with China’s economy. China’s Fukushima backlash is starting to weigh on Japan stocks as the performances of these companies are expected to be negatively impacted by China consumer’s boycott. On an international level, China has suspending seafood imports from Japan. Oil prices remained steady as China’s stimulus vies with demand concerns. Prices are now trading around where it was as the year began despite efforts by OPEC+ to shore up prices by curbing supply, with traders still remaining more concerned over China’s demand. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

US Budget deficits are exploding like never before even though the economy appears to be in good health. The concern over the sustainability of the fiscal deficit are becoming larger with the cost of borrowing rising and as a result accounting for a larger share of the federal revenue. Powell has bond traders right where he wants them - full of doubt - with market being split in futures positioning which gives the feds valuable leeway to quickly adjust their policy as and when necessary. At the moment, the 10-year yield stood above 4.2%. Powell signals that the fed will raise rates if needed. The message is relatively unchanged as the fed continued to be fixated with the 2% inflation target. He has also noted that the economy may not be cooling as fast as expected which could warrant further actions if inflation maintains above their target. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Global funds abandon China’s blue chip in $11 billion sell off as oversea funds flee the mainland’s market at the back of broader financial contagion. At the moment, the selling streak is showing little sign of cooling despite accounting for a fraction of the market. US home purchase application hits its lowest since 1995 at the back of higher borrowing cost with the 30-year fixed mortgage being fixed at 7.31% as of this week. The housing data further reinforce the trend that most home owners are unwilling to move and take on higher rates. Euro area’s worsening downturn is fuelling bets of a rate pause in September as the activity signals within Euro area are trending into the contraction region this year. Traders are now placing in lower rate expectations and earlier rate cuts that is to begin in 2024. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Sudden rally in China stocks has traders scratching their heads with speculations surrounding state intervention in the form of direct buy backs or stimulus. At the moment, the HSI is still oversold with over half of the members trading below RSI 30. China ramps up fight with yuan bears to stop selloff from spiralling. That said the steps taken are largely designed to slow the pace of the yuan depreciation rather than engineering a sustained rally. The central bank has also reaffirmed their stance on not “over-adjusting” the currency. Oil holds loss on signs of supply rebound as demand woes linger with prices trading near $80 a barrel while productions are expected to increase with talks intensifying within the middle east. Despite the pessimistic view on the demand and supply situation, it is unlikely that demand will fall below it. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Hang Seng Index sees longest losing streak since 2021 amid gloom surrounding the fact that mainland banks kept their key interest rate that was tied to mortgages on hold. The disappointment had intensified a sell off as traders were hoping for more stimulus as their patience is running out. The fed cant celebrate yet as investor expect rates and inflation to remain elevated as investors are now treating the situation as more of a headache than an emergency. While things are looking rosier in the west, it is still unclear how the challenges in the east will impact them. Philippine central bank expects economic growth to miss target as economic headwind alongside with monetary policy adjustment could result in a slower growth in the economy. Excluding the pandemic years, the economy posted its weakest expansion since 2011. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

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China local government are expected to sell 1.5 trillion yuan of special financing bonds to help 12 regions repay their local government debt. The move came as the government is getting serious about clearing the off-balance sheet debt of local government in an attempt to lower the systematic risks. US Consumers are nearing the day of reckoning as pandemic cash stash shrinks while savings rate had plunged after the pandemic. That said, the outlook is mixed as US consumers continue to spend despite the headwinds and employment data continued to remain strong. Risk appetite eases $1.6 trillion maturity wall as investors flushed with cash are looking to put money to work in Junk asset and companies with rushing maturities are rushing to take advantage. The upswing came as economic data continued to remain strong and investor outlook remained optimistic. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

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Fed minutes set to show that only a minority members saw an end of their tightening over the remaining of the year as many are on the side of another 25-basis point hike later this year. This goes against the market expectations that the fed are done with their rate hikes. China markets approach grim milestones as selloff deepens with a key equity gauge set to erase all gains seen from last month’s politburo meeting. That said, price actions today were just another classic day for China stocks as people are losing their patience with the country’s recovery. Oil price holds steady as the market contends with China economic woes and whether the beating heart of global and oil demand growth will stage a convincing recovery anytime soon. On the other hand, the recent supply cuts from OPEC+ had also held the price of oil steady as it offsets the demand outlook. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

China cut rates by 15 basis points to 2.5% which is a surprised move by most analyst in an attempt to combat the ongoing economic woes. At the moment, the tilt towards pro-growth is getting stronger and more calls have been made to consider direct fiscal stimulus to boost spending. PBOC advisor says that China is urgently in need to boost consumption and that it is necessary to use all reasonable, legally compliant and economic channel to do so. At the moment, all the stimulus thus far has been focused on the monetary front. The fed’s interest rate debating is shifting from how much higher interest rates needs to go to how long they should remain elevated now that inflation is on track with expectations. At the moment, economist are projecting rates to go up one more quarter point before cutting at end of 2024. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Singapore warns of “Unpredictable” risk amid US-China tension as the global economy is starting to be organised by geopolitics and security considerations instead of economic efficiencies. That said, Singapore is still confident of avoiding a recession this year despite the global headwinds. China hedge funds are in crisis as the industry is experiencing sharp contractions at the back of a loss of interest from both Asia and foreign investors. The MSCI China has also lagged its global peers by a massive amount which had contributed to the loss of investor interest and confidence. The fed is playing a waiting game to try to avoid a recession as both the wall street and the central bankers are still debating as to whether the impact of the tightening will result in a soft landing given that the recent data is suggesting a strong and resilient economy. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

US headline inflation in July increased slightly to 3.2% from the previous month’s 3% figure which marked the slowest pace since March 2021. This is largely in line with market expectation and the data may ease pressure on the fed to raise rate further this year. Singapore gasoline pump price soar to 11-month high which adds concerns to the persistent inflation that we are battling against. The increase in gas prices could well feed into the logistic and business costs which is then further passed on to consumer via higher prices. Treasury yield bumps up risk for Asia stock as companies earnings may suffer from the higher borrowing cost as a result of the US fight against inflation. Apart from just the impact of interest rate, the strength of the USD is also harming Asian companies which is unfortunate. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Recession worries are getting investors to doubt stocks and buy treasuries as more than two-thirds of the survey respondents anticipate a recession by end of 2024. The same view had also got investors buying treasury to de-risk their portfolio and earn a return when the fed pivots. Wheat prices climbs as the attack by Ukraine had resulted in higher risk in a key export route for Russian commodities to pass through the black seas. That said, commercial ships are still passing through the strait despite the attack and business seemed to go on as usual. Investors in India sees another year of higher rates at the back of higher inflation driven by the sudden spike in food prices. At the moment, the RBI had left their benchmark rate unchanged in the last two meetings but their tone has since changed due to the unfavourable inflation data. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

China is losing out as global funds chase returns in Japan stocks with foreign buying of Japanese equities exceeding that of Chinese peers for first time since 2017. This came as investors looks for alternative at the back of scepticism over the CCP abilities to rejuvenate their markets. US Treasury market topped record $25 trillion in July as the government is on the hook to investors to ramp up their borrowing in order to plug a widening budget gap. Long maturity yields had also been pushed up at the back of concerns over investor demand for further issues. Vietnam PM says nation is targeting 9% growth in second half and that the government will prioritise boosting economic growth while aiming to balance between interest rates and FX. Thus far, the country is at risk of missing their growth target at the back of a global downturn for goods. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

China’s rally is just an opportunity to sell for many global funds with US and European long only fund managers taking profits on the recent rally while downgrading their China’s rating. At the moment, Chinese stocks are trading below its five-year average multiple of over 12 time. BOE raises rates to 5.25% with warning that their policies will remain tight until inflation comes back down to their 2% target which is estimated to occur in 2025. The bank had also cut its growth forecast over the next two year as a result of their fight against inflation. BOJ Intervenes for second time this week to slow yield spike, underscoring its determination to curb sharp moves in rates even as it makes room for them to rise. At the moment, it is still unclear if the bank is focusing on the level or the speed of the yield rise. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok