Archives of “August 29, 2019” day

rss

IMF gives China cover to weaken the yuan further

  
Analysis, Economy
#  #

IMF finds no fault with yuan weakness

IMF finds no fault with yuan weakness
The IMF is recommending that Beijing allow the yuan to fall further if the trade war escalates, according to the South China Morning Post.
They cited comments from Alfred Schipke, who is the IMF’s senior resident representative to China. He spoke in Beijing yesterday.

“If there is a shock, the exchange rate ought to be part of the adjustment and should be allowed to depreciate. That is what exchange rates are for,” Schipke said, adding that the exchange rate should be decided by market forces. “In principle let the market decide,” he said.

China has been leaning against yuan weakness by setting the mid-point at levels below the market. The currency has fallen about 4% this month.

Trump is also tweeting about the economy:

TweetThe latest GDP report showed growth at a 2.0% annualized pace.

Here are the rate cut steps expected from the PBOC, perhaps as soon as next month

  
Analysis, Economy
#  #  #  #  #

A report from Reuters outlines the likely path for People’s Bank of China interest rate cuts, maybe as early as September.

  • expected to first reduce their funding costs by lowering the rate on its medium-term lending facility (MLF)
  • That will open the door for a cut in the PBOC’s new benchmark lending rate, the loan prime rate (LPR), the next time it is set on September 20
  • he MLF forms the basis for the new LPR rate, but banks can add a premium to reflect funding costs and credit risks
  • In what was seen as a symbolic move, the revamped one-year LPR was set at 4.25% last week, down 6 basis points (bps) from 4.31% previously and 10 bps lower than the existing benchmark one-year lending rate, which will still apply to older loans
Article was overnight, so an ICYMI, link here for more.
PBOC Gov Yi Gang:
A report from Reuters outlines the likely path for People's Bank of China interest rate cuts, maybe as early as September. 

Here is what’s driving gold prices higher. Forecasts out to end-2019.

  
Analysis, Gold / Silver

A useful summary indeed, comments from UBS (in brief from a longer note):

Investors turning to gold amid
  • escalating trade risks
  • likely impact of higher tariffs on growth and inflation
  • Dovish Fed expectations
  • concerns about the potential for FX intervention
  • Global yields continue to fall
  • Latest headlines on some potential de-escalation of trade tensions seem insufficient to trigger a correction in gold, suggesting that there is a relatively high threshold for easing investor concerns. Persistent uncertainty is likely to keep gold well supported. 
Forecast:
  • We continue to see gold rallying to as high as $1,600 between now and year-end
  • a potential pit stop around $1,580
A useful summary indeed, comments from UBS (in brief from a longer note):

Higher close for US equities with the Dow leading the way

  
Analysis, US Market
#  #  #  #

2 of 3 days higher.

Earlier in the day, when stocks opened lower, the headline was “Stocks down – 4 of 5 days lower”.
Now after a higher close, the headline reads “Stock up – 2 of 3 days higher”
Both are NOT fake news, but the 2nd one is the reality for the day.
US major indices are ending higher with the Dow stocks leading the way today.
The final numbers are showing:
  • The S&P index rose 18.78 points or 0.65% at 2887.94.
  • The Nasdaq index rose 29.937 points or 0.38% at 7856.88
  • The Dow rose 258.20 points or 1.00% at 26036.10.
The biggest Dow 30 winners on the day included:
  • Pfizer, +2.15%
  • UnitedHealth, +1.98%
  • United Technologies, +1.85%
  • Nike, +1.78%
  • Home Depot, +1.73%
  • Walt Disney, +1.51%
  • Boeing, +1.45%
  • Bank of America, +1.44%.
Go to top