Archives of “August 2019” month

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

  
Analysis, Economy
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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
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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%.

PBOC reportedly to issue its own cryptocurrency as early as November

  
Analysis, BITCOIN

Forbes reports, citing two sources familiar with the matter

China
  • People’s Bank of China is close to issuing its own cryptocurrency (12 August)
This has been rumoured for a while now but the latest report suggests that China is looking to issue its own cryptocurrency just in time for Singles’ Day (11 November) – which is the country’s biggest shopping day for online sales.
China is said to have accelerated their push for digital money after Facebook announced plans back in June to launch Libra within a year. The report adds that:

“The PBOC plans to distribute its cryptocurrency through at least seven institutions in the initial stage, including Chinese tech giants Alibaba and Tencent, China’s largest payments card issuer China UnionPay, and four Chinese state-owned banks.”

I reckon this could either be a massive game-changer in the industry or a massive flop. But given that this is China, I’m inclined to lean towards the former.
As such, watch this space as other central banks around the world may look to ride on the trend soon enough; should they have the capacity and infrastructure to do so.
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