Another Chinese property development firm missed a debt payment

Bloomberg with the report on a missed payment by Fantasia Holdings.

The news was out overnight so it is not new news, posting as an ICYMI.
Says the Bloomberg report (more at that link above (may be gated) )
  • Fantasia didn’t repay a $205.7 million bond that was due Monday, according to a company statement. 
  • Separately, property management company Country Garden Services Holdings Co. said that a unit of Fantasia didn’t repay a 700 million yuan ($108 million) loan that also came due on Monday and that a default was probable. 
  • Shenzhen-headquartered Fantasia’s management and board “will assess the potential impact on the financial condition and cash position of the Group” stemming from the skipped bond payment, it said. 
Bloomberg with the report on a missed payment by Fantasia Holdings. 

NASDAQ snaps a five day losing streak

Dow up over 700 points at the session highs

The major US indices close sharply higher on the first day of the new trading month/new trading quarter with the NASDAQ index snapping a five day losing streak.

Shares of Merck surged 8.6% on the back of a Covid drug that cuts hospitalizations by 50%. Transportation stocks like United airlines, Delta Airlines and Southwest Airlines are also higher on the back of that news. Energy was the best performing sector as oil prices move back to the upside.
  • NASDAQ up for the first time in six sessions
  • Dow S&P, NASDAQ still on track for weekly losses
  • Russell 2000 index up nearly 2%
  • All S&P sectors are higher after yesterday saw the same sectors all lower
The final numbers are showing
  • Dow industrial average rose 483.53 points or 1.43% at 34327.45
  • S&P rose 49.55 points or 1.15% at 4357.09
  • NASDAQ index rose 118.12 points or 0.82% at 14566.70
  • Russell 2000 rose 37.26 points or 1.69% at 2241.63
For the week,, the major indices all closed lower.
  • Dow Jones -3.0%
  • S&P index -3.84%
  • NASDAQ index -3.13%

European equity close: Soft start to the new month

Rough week for equity markets:

  • UK FTSE 100 -1.0%
  • German DAX -0.9%
  • French CAC -0.4%
  • Spain IBEX +0.2%
  • Italy MIB -0.7%
On the week:
  • UK FTSE 100 -0.3%
  • German DAX -2.3%
  • French CAC –1.8
  • Spain IBEX -0.9%
  • Italy MIB -1.3%
The good news is that European equities finished off the lows and now US stocks are beginning to run to the upside. Here’s a look at the daily DAX and it shows how we broke the summer lows earlier today before closing back above them.
German DAX

World Bank leaders found to be favouring China … “Doing Business”

An internal committee of the World Bank managed to launch an independent investigation into top brass …

The World Bank ethics committee commissioned a law firm to sniff out what was going on.
Their report found that World Bank leaders, including then-Chief Executive Kristalina Georgieva, applied “undue pressure” on staff to boost China’s ranking in the bank’s “Doing Business 2018” report:
  • Georgieva, and a key adviser, Simeon Djankov, had pressured staff to “make specific changes to China’s data points” and boost its ranking at a time when the bank was seeking China’s support for a big capital increase.
  • The report raises concerns about China’s influence at the World Bank, and the judgment of Georgieva – now managing director of the International Monetary Fund – and then-World Bank President Jim Yong Kim.
  • Georgieva said she disagreed “fundamentally with the findings and interpretations” of the report and had briefed the IMF’s executive board.

Kristalina Georgieva now heads the IMF.  Oh dear.

An internal committee of the World Bank managed to launch an independent investigation into top brass ... 

The USD falls vs all the major currencies this week except one

USD falls the most vs the NZD

The USD fell versus all the major currencies is weeks with the exception of one…the CHF.
USD falls the most vs the NZD
The US dollar fell the most versus the NZD and AUD as those currencies benefited from risk on sentiment, somewhat improving China and expectations that as Covid spread slows, central banks would start to look toward reversing some of the expansionary policy.
After trading sideways on Monday, the NZDUSD rose on each successive day this week.  The pair has risen 9 of the last 11 trading days.
Versus the AUDUSD, the pair was modestly lower on Monday, before also rising on each successive day this week.
For the USDCHF, last Friday, the pair closed near the low for the week.  After trying to extend lower early in the session on Monday, the pair moved sharply higher. That moment it was reversed on Tuesday before rallying up to the weeks high on Wednesday and moderating lower on Thursday and again today. Overall, the week was full of up and down price action with only an 88 pip trading range.

The bond market wakes up. US 10-year yields hit the highest since Aug 13

Taper back on the table?

Taper back on the table?
There’s a sweet spot for many markets where delta pushed back the taper but the economy remains solid and rates stay low.
Of course, that’s an impossible paradigm to hold. Yes, Powell probably won’t signal a taper this week but beyond that either delta will meaningfully hurt the global economy or delta will fade and the case for tapering will return.
At the moment, the bond market appears to be hinting at a fade in delta and rising odds of a September taper. Overall, I suspect this is more about delta and confidence this round of cases will fade quickly but I see the Fed argument too.
From where I stand, Powell’s best course of action is to preserve some optionality into the Sept meeting but emphasize that the Fed will do everything it can to support the recovery. Ultimately, a November taper hint and December announcement makes the most sense.
Despite the uptick in rates, the bond market certainly isn’t seeing any inflation.

Shell (world’s biggest fuel retailer) indicator suggests fuel demand recovery has remained slow

An ICYMI on the still-slow recovery from coronavirus impacts across much of the globe:

  • Shell expects its fuel sales to fall or at best be broadly steady for the first quarter
  • said it saw refined oil product sales at 3.7-4.7 million barrels per day (bpd) for the first quarter compared with just under 4.8 million bpd in the last quarter of 2020. It had previously forecast sales of 4-5 million bpd.
Info via Reuters, was posted overnight ICYMI.
An ICYMI on the still-slow recovery from coronavirus impacts across much of the globe:

Here’s a BTC opinion – Bitcoin could surge to $300,000 then drop 90%

Comments from Bobby Lee, co-founder and former CEO of crypto exchange BTCC to CNBC Monday afternoon US time.

  • could soar as high as $300,000 in the current bull market based on its historical patterns
  • (he does add that he was not sure if history would repeat itself)
  • “Bitcoin bull market cycles come every four years and this is a big one”
  • “I think it could really go up to over $100,000 this summer.”
  • warned the bubble will burst after peaking
  • a “bitcoin winter” that could last for years … following its bull run
  • Investors should be aware that bitcoin’s value could fall as much as 80% to 90% of its value from the all-time peak
BTC has dropped in past hours, maybe traders didn’t see the 300K forecast before the 90% drop bit?
Comments from Bobby Lee, co-founder and former CEO of crypto exchange BTCC to CNBC Monday afternoon US time.

Bank of Japan policy review announcement due today – preview

There is no time scheduled for the announcement, after 0230GMT is a good bet. The Bank will be keen to ensure what it changes is not perceived as a reduction in policy support, Bank of Japan Governor Kuroda will likely emphasise this, and also that the Bank stands ready to do more if needed, at his news conference that will follow at 0630 GMT.
The much-awaited BOJ review of its monetary policy is aimed at making its programme of support sustainable for longer.
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