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View detailsHas the easing cycle come to an end? The market is betting that interest rates in the Eurozone will be "higher and longer"
Expectations of further interest rate cuts by the European Central Bank are rapidly cooling down. Investors are increasingly betting that the eurozone will enter an environment with "higher and longer" interest rates, and market pricing indicates that the current easing cycle of the European Central Bank may have come to an end. Reuters reported on August 14 that the shift in market expectations mainly stems from two key developments. Firstly, the recent conclusion of the trade agreement between the United States and Europe has alleviated market concerns that tariffs might bring deflationary shocks. Secondly, the market generally believes that the significant increase in fiscal spending that Germany is about to implement will effectively boost the economy, thereby reducing the necessity for the European Central Bank to further cut interest rates over a longer period. As a result, several major investment banks, including Goldman Sachs, have adjusted their forecasts, believing that the current easing cycle of the European Central Bank has come to an end. Although trade risks may still put pressure on growth and inflation, these banks believe that the European Central Bank, which gave a positive assessment of the eurozone economy at its most recent meeting, may keep interest rates at 2% in the foreseeable future. This shift in expectations has been directly reflected in the foreign exchange market. The euro has risen by nearly 3% this month as investors increasingly expect the Federal Reserve to resume cutting interest rates in September while the European Central Bank will hold steady. Fiscal stimulus and trade easing reshape expectations Behind the reversal of market expectations lies the driving force of macroeconomic fundamental factors, among which Germany's fiscal expansion and the easing of transatlantic trade relations are the two core factors. Germany approved a historic fiscal stimulus bill worth up to 500 billion euros in March this year. As the economic engine of the European Union, Germany's fiscal shift not only implies its own fiscal expansion but also signals the opening of the fiscal policy ceiling for the entire European Union. The market holds high hopes for this move, believing that it will strongly boost the overall economic growth of the Eurozone. Economists predict that the bill is expected to increase Germany's GDP growth rate by about 1.5 percentage points, thereby reducing the urgency of stimulating the economy through monetary easing. Furthermore, although the recently reached US-EU trade deal is not perfect for Europe, it has successfully avoided the threat of higher tariffs and eliminated a major uncertainty that has shrouded the market for months. Although this outcome may lead to a reduction of about 0.5 percentage points in the eurozone's GDP growth forecast, it has also significantly alleviated investors' concerns that tariffs could trigger severe deflation, providing the European Central Bank with more room to maintain the current interest rate level. Investment banks' views tend to be hawkish With the changes in the macro environment, the views of investment banks have generally turned hawkish. Paul Hollingsworth, the head of developed market economics at BNP Paribas, believes that the next move of the European Central Bank will be to raise interest rates in the fourth quarter of next year. He described this move as "a recalibration within the neutral interest rate range", as the balance point between data and risk is shifting from the drag of tariffs to the positive push brought by fiscal policy. Lyn Graham-Taylor, senior interest rate strategist at Rabobank, expressed a more cautious view: "We are more pessimistic about growth than others and have more concerns about inflation than others." But we predict that deposit interest rates will remain unchanged until the end of 2027. These views are in line with the judgment of institutions such as Goldman Sachs that the easing cycle of the European Central Bank has ended and interest rates will remain stable for a longer period of time. Market indicators suggest a shift in the interest rate path Several key interest rate indicators reflecting market expectations clearly outline the transformation of the interest rate path. Forward contracts based on the euro's short-term interest rate (ESTR) indicate that the market believes the possibility of a 25 basis point rate cut in March next year is approximately 60%, but this is more like a cautious pricing to hedge against potential risks. After that, interest rates are expected to resume their upward trend, with the market-implied deposit rate for December 2026 being 1.92%. The 5-year overnight index swap (OIS) rate for the euro, regarded as a key barometer of the medium-term monetary policy outlook, has been trading above 2% over the past six weeks and is currently around 2.12%. This indicator can be roughly interpreted as an implicit measure of the neutral interest rate by the market. In addition, the futures curve of the Euro Interbank Offered Rate (Euribor), which reflects the borrowing costs among European banks, also shows a similar pattern, indicating that after a brief decline in March next year, the interest rate will rebound above 2% before 2027. Risk Warning and Disclaimer The market involves risks. Please invest with caution. This article does not constitute personal investment advice and has not taken into account the individual user's specific investment objectives, financial situation or needs. Users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Any investment made based on this is at your own risk.
2025-08-14 -
View detailsMasayoshi Son has once again "turned the tables" by making a big bet on OpenAI
On Tuesday, SoftBank Group's share price hit a record high of 14,825 yen, with the company's market value reaching 146 billion US dollars. The share price has risen by approximately 75% this year. And all of this is attributed to Masayoshi Son's bold bet on OpenAI. This valuation leap has nearly doubled the book value of SoftBank's previous $9.7 billion investment in OpenAI, which is crucial for covering the cumulative investment loss of up to $22 billion of Vision Fund II. The performance of SoftBank Vision Fund Phase 2 was incredibly poor. Since its launch in 2019, the fund has accumulated losses of 22 billion US dollars in its investments in 280 different companies, accounting for nearly one-third of its investment capital. It is reported that SoftBank acquired shares in OpenAI through complex financial operations - Vision Fund 2 borrowed billions of dollars from SoftBank itself, while SoftBank in turn borrowed from the Bank of Japan. Meanwhile, the fund also received billions of dollars in loans from private equity lender Apollo, which will be given priority for repayment. This also means that it might have made a profit before SoftBank invested this sum of money, but this requires OpenAI to complete the transformation to a for-profit structure. Masayoshi Son's "personal gamble" This arrangement deeply binds his personal wealth to the performance of the fund. Public documents in Japan show that Masayoshi Son also pledged approximately 9 million shares of SoftBank he personally held as loan collateral. Masayoshi Son's personal shareholding arrangement has raised concerns about corporate governance from the outside world. David Gibson, a stock analyst at MSFT Financial, told the media that this arrangement reduces the potential returns that SoftBank shareholders might obtain from their investment in OpenAI. "From a corporate governance perspective, this is a disaster." This huge investment has also once again exposed SoftBank to the problem of highly concentrated risks. If the additional investment is completed, OpenAI's single asset could account for 34% of the total size of Vision Fund Phase 2. For now, this investment is heading towards a huge victory. But as the report points out, it may also end in a similar tragedy. The market involves risks. Please invest with caution. This article does not constitute personal investment advice and has not taken into account the individual user's specific investment objectives, financial situation or needs. Users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Any investment made based on this is at your own risk.
2025-08-13 -
View detailsEmerging market ETFs have seen capital outflows for two consecutive weeks, while China has attracted over 50 million US dollars in capital inflows against the trend
According to data compiled by the media, investment sentiment in emerging markets remains under pressure. Data shows that as of the week ending August 8, US-listed emerging market exchange-traded funds (ETFs) investing in stocks and bonds of developing countries witnessed a net outflow of funds for the second consecutive week, totaling $578 million, continuing the $1.11 billion divestment in the previous week. However, in the overall sluggish environment, the Chinese market defied the trend and received significant financial support, becoming the country with the largest net inflow of funds last week. Data shows that the Chinese market attracted a net inflow of $50.4 million last week, mainly driven by ETFs such as American Century Avantis Emerging Markets Equity. It is worth noting that this performance stands in sharp contrast to the previous week, when there was an outflow of 17.9 million US dollars in the Chinese market. In contrast, the Indian market witnessed the largest withdrawal of capital, with a net outflow of 388.6 million US dollars. In the previous week, the net outflow from the Indian market also reached as high as 298.2 million US dollars, topping all emerging markets. A previous article on Wall Street Journal stated that the direct cause of the capital withdrawal was the Trump administration's trade actions against India. According to CCTV News, Trump said that starting from August 1st, a 25% tariff would be imposed on Indian goods exported to the United States, which is higher than the 15% to 20% range imposed on several other Asian countries. Analysts from Deutsche Bank and Barclays predict that due to weak foreign capital inflows and resistance from US tariffs, the Indian rupee is expected to remain one of the worst-performing currencies in Asia in the second half of this year and may fall to a new historical low before the end of the year. Data shows that emerging market equity ETFs recorded a net outflow of $589.6 million last week. In contrast, bond ETFs recorded a slight net inflow of 11.6 million US dollars. Despite this, the total asset size of emerging market ETFs still increased from 403.3 billion US dollars to 412.5 billion US dollars. In terms of market performance, the MSCI Emerging Markets Index rose by 2.3% last week, closing at 1,253.79 points. Risk Warning and Disclaimer The market involves risks. Please invest with caution. This article does not constitute personal investment advice and has not taken into account the individual user's specific investment objectives, financial situation or needs. Users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Any investment made based on this is at your own risk.
2025-08-12 -
View detailsThe market is "overly certain" about the Federal Reserve's interest rate cut in September. Morgan Stanley: Future data is very important, especially the US CPI
According to the Chui Feng Trading Desk, Seth Carpenter, the chief global economist of Morgan Stanley, stated in his latest report that although the market currently regards the Federal Reserve's interest rate cut in September as a nearly certain event, there are still many variables to be observed. The CPI data to be released this week will be particularly important, especially in answering the question of how tariffs drive inflation outcomes. The report emphasizes that the experience of 2018 shows that the full impact of tariff transmission still requires a lag period of three to five months, and the July CPI will clearly reveal the beginning of tariff driven inflation. Despite the red light in the job market, inflationary pressure is quietly accumulating, which has become the core reason against interest rate cuts. This lag stems from the actual operation of the supply chain. The report explains that this difference stems from factors such as the effective time of tariffs, transportation cycles, trade transfers, and compliance with the United States-Mexico-Canada Agreement (USMCA). As time goes by, this gap will gradually narrow, thereby exerting sustained upward pressure on inflation in the coming months. Inflationary pressure is expected to persist, and data will determine success or failure. On the one hand, the employment report indicates that the labor market is weakening; On the other hand, the price increase seems to be an inevitable trend. What complicates the situation even more is that the details of the trade agreement have not yet been fully finalized. This ongoing uncertainty itself will have an impact on the recruitment decisions of enterprises. The US CPI to be released this Tuesday will be the first key test. The report predicts that the year-on-year growth rate of core CPI in July will accelerate from 0.23% to 0.32%, mainly driven by the prices of core commodities affected by tariffs.
2025-08-11 -
View detailsThe most dovish prediction has emerged! Jpmorgan Chase: The Federal Reserve will launch a "fourth consecutive rate cut", with a cumulative interest rate reduction of 100 basis points
After the news of the personnel changes of the Federal Reserve's board of governors was released, jpmorgan Chase updated its forecast for the Federal Reserve's monetary policy, believing that the Federal Reserve will cut interest rates by 25 basis points in succession at the next four meetings. On Thursday local time, Trump officially announced the nomination of Stephen Miran, the current chairman of the Council of Economic Advisers, as a member of the Federal Reserve Board to fill the term of Federal Reserve Board member Kugler, which is set to expire in January next year. The media reported on the same day that in the process of US President Trump and his advisory team seeking a candidate for the next chairperson of the Federal Reserve, current Federal Reserve Governor Christopher Waller is gradually becoming one of the most likely candidates. Based on the latest personnel changes, Michael Feroli, an economist at jpmorgan Chase, stated in his latest report that, considering risk management, the Federal Reserve is expected to implement a 25 basis point interest rate cut ahead of schedule at the September meeting, and then continue to cut rates at the following three meetings before indefinitely suspending it. This prediction represents the most dovish view on Wall Street regarding the Fed's policy. Personnel changes drive the adjustment of policy expectations Jpmorgan Chase explained that it would be a tough task to get Milan approved before the next Federal Open Market Committee meeting begins on September 16 after the Senate returns from its recess on September 5. Historically, newly appointed governors or the chairperson of the Federal Reserve have sometimes abstained at the first meeting of the Federal Open Market Committee. However, if Milan happens to be a director before the next meeting and does not abstain, the final voting result may witness a "grand spectacle" of three votes against, which will be a considerable number of opposing votes. For Powell, the risk management considerations for the next meeting may go beyond balancing employment and inflation risks; political and personnel factors also need to be taken into account. In this case, implementing a rate cut in advance might become the path with the least resistance. The approach with the least resistance would be to advance the next 25 basis point rate cut to the September meeting and then carry out three equal rate cuts at the following three meetings. The labor market has become a key indicator Analysts say that the Federal Reserve's easing policy when the stock market is at or close to its historical high is not without precedent. However, when the stock market is at a high point, inflation is above the target and continues to rise, easing policies are relatively rare. Therefore, the lenient policies at the next meeting may not be widely welcomed by the committee. Jpmorgan Chase emphasized that at the last FOMC meeting, Powell expounded on labor market risks from the perspective of the unemployment rate. In simple terms, if the unemployment rate reaches 4.4% or higher, there may be a more significant interest rate cut at the next meeting. However, if the unemployment rate is 4.1% or lower, cutting interest rates in the context of full employment and inflation above the target may trigger some opposition. Risk Warning and Disclaimer The market involves risks. Please invest with caution. This article does not constitute personal investment advice and has not taken into account the individual user's specific investment objectives, financial situation or needs. Users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Any investment made based on this is at your own risk.
2025-08-08 -
View detailsTrump tariffs are about to take effect, and the test of the global economy has just begun.
The radical measures taken by the Trump administration in the United States to reshape the global trade landscape are pushing the country into a new stage of protectionism full of uncertainties and posing a severe test to the global economy. It remains to be seen whether this policy can revitalize the US manufacturing industry as expected, but the potential risks of it triggering inflation and impacting financial markets have become increasingly prominent. According to the latest media reports on Thursday, the comprehensive tariff policy of the United States came into effect after early Thursday morning New York time. Previously, the U.S. Customs and Border Protection was granted one week to make the necessary adjustments. After months of chaotic threats and repetitions, almost all of the United States' trading partners will face higher tariff barriers. It is estimated that the new tariffs will push the average tariff rate in the United States from 2.3% last year to an astonishing 15.2%. According to CCTV News, on July 31 local time, the White House issued an executive order to reset the "reciprocal tariff" rate standards for some countries: countries listed in Annex 1 of the executive order will apply individual rates, while those not listed will uniformly apply a rate of 10%. If any country or region evades tariffs through the transshipment method in a third place, a 40% transshipment tax will be levied on its goods. The White House announced that the new tariffs will take effect on August 7. This move has raised alarm in the financial market. Analysts from major Wall Street institutions have warned that investors should be prepared for a market correction. Morgan Stanley, Deutsche Bank and Evercore ISI all pointed out in their reports on Monday that the S&P 500 index may face a short-term decline in the coming weeks or months. The details of tariffs remain unresolved, and the global supply chain continues to be under pressure Since Trump first announced and subsequently suspended tariffs in April this year, the global economy has been shrouded in turmoil, and countries have engaged in months of tense negotiations with the United States. This uncertainty has brought about widespread anxiety among enterprises regarding supply chain disruptions and rising costs. Nowadays, the general framework of the new tariffs has been implemented, and most economies have accepted the reality that high tariffs will persist for a long time. Many countries have committed to investing hundreds of billions of dollars in the United States in exchange for lower tariff rates. However, key details of Trump's plan remain unresolved, bringing continuous uncertainty to the global supply chain. For instance, the tariff preferences for automobiles in the European Union, Japan and South Korea have not yet been confirmed by legislation. Before that, automobiles will still face higher costs. Negotiators from countries such as the European Union, Japan and South Korea, which have already reached agreements with Trump, are still working behind the scenes to seek further exemptions for key export industries from US officials. In addition, specific details regarding the adjustment of investment commitments and market access policies have not yet been announced. Meanwhile, the final efforts of some countries aimed at securing more favorable conditions have failed. Swiss president left Washington on Wednesday, failing to successfully lower the 39% tariff he faced. According to CCTV News, on Wednesday, Trump signed an executive order imposing an additional 25% tariff on goods from India in response to India's continued "direct or indirect imports of Russian oil". At present, tariff negotiations with Mexico and Canada, the largest trading partners of the United States, are still proceeding independently on another track. Trump also vowed that he would soon announce tariff plans for key industries such as pharmaceuticals. CCTV reported that Trump has announced that he will impose tariffs of about 100% on chips and semiconductors. Economic Alert: Difficult times have arrived Trump insists that high tariffs will significantly reduce the trade deficit and force businesses to move their manufacturing back to the United States. But critics argue that this move could lead to runaway inflation and cause shortages of goods on store shelves. Although the full economic impact has yet to materialize, recent economic data have already raised red flags. It is reported that the employment data for July shows that the growth of jobs in the United States has undergone the most sharp downward revision since the outbreak of the COVID-19 pandemic. Meanwhile, due to the slowdown in consumer spending and enterprises' adaptation to changes in trade policies, the economic growth of the United States has slowed down in the first half of this year. At present, the unemployment rate remains low and prices have not soared. Part of the reason is that enterprises have absorbed most of the increased costs so far. But experts warn that this situation is hard to sustain. Wendy Cutler, vice chair of the Asia Society Policy Institute and a former U.S. trade negotiator, said, "There are signs that tougher times are on the way." Many companies built up inventories before the tariffs took effect." She believes that since enterprises are unlikely to endure low profit margins in the long term, "price hikes are almost inevitable." The growth of tariff revenue and the prosperity of manufacturing are contrary to each other Despite numerous challenges, Trump insists that his measures will usher in a new economic golden age and refutes economic data that do not conform to his narrative. He also highly praised the growing tariff revenue and even hinted that it might bring tax refund checks to some Americans. Data from the US Treasury Department shows that in the nine months ending in June, tariff revenue has soared to a record high of 113 billion US dollars. However, it remains unclear whether progress has been made on another clear goal of the plan - bringing production back to the United States. Brad Jensen, a professor at Georgetown University's McDonough School of Business, pointed out the inherent contradictions among its policy goals. He indicated that it is difficult to achieve growth in tariff revenue and a boom in manufacturing employment simultaneously. "Both can't be true at the same time," he explained. "If domestic manufacturing picks up, then we won't have so much tariff revenue," because imported goods will decrease. This fundamental contradiction has cast a huge question mark over the long-term feasibility of Trump's trade agenda. Risk Warning and Disclaimer The market involves risks. Please invest with caution. This article does not constitute personal investment advice and has not taken into account the individual user's specific investment objectives, financial situation or needs. Users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Any investment made based on this is at your own risk.
2025-08-07 -
View detailsThe "transition drama" of the Federal Reserve has now begun
Adriana Kugler, a governor of the Federal Reserve, unexpectedly announced her resignation, providing a crucial bargaining chip for Trump to "reshape" the Federal Reserve. Last week, Adriana Kugler, a member of the Federal Reserve Board, unexpectedly announced her departure this Friday, about six months ahead of her scheduled term. According to CCTV News, Trump said in his speech on Tuesday that the new chairperson of the Federal Reserve might be announced soon, and the decision on the candidates for the Federal Reserve governors will be made this weekend. This could be Trump's only chance to "place his own candidate" on the committee before Chair Powell's term expires in May next year. According to the regulations, the President of the United States can only select the chairperson of the Federal Reserve from among the members of the Federal Reserve Board. According to media reports citing informed sources, Trump is seriously considering making Kugler's successor the next chairperson of the Federal Reserve. Wall Street Journal previously mentioned that Trump said on Tuesday that he would narrow down the list of potential future Federal Reserve chairpersons to four candidates, including two Kevins - former Federal Reserve Governor Kevin Walsh and National Economic Council Director Kevin Hassett. The identity of the fourth candidate was not disclosed and does not include Treasury Secretary Bessent. Analysts point out that the nominated candidate needs to strike a balance between maintaining the independence of the Federal Reserve and demonstrating loyalty to Trump's policies. This delicate situation may undermine his credibility as the future chairperson. The unexpected resignation created an opportunity for Trump to make early preparations The chairperson of the Federal Reserve must be selected from among the board members, and Powell's term as a board member will not end until 2028. During Trump's tenure, no other current board members' terms will expire. Kugler's unexpected resignation provided Trump with an unexpected strategic opportunity. Kugler, who was nominated by Biden as a board member in 2023, has been advocating for maintaining interest rate stability since the beginning of this year. Her sudden departure provided Trump with an unexpected opportunity to "place" the next chairperson of the Federal Reserve among the board members. Andy Laperriere, director of U.S. policy research at Piper Sandler, said: If they want to promote someone who is not currently on the committee to be the chairperson, then they must elect him. According to media reports, as of Monday evening, Trump was still listening to the advice of his Allies on Kugler's successor and had not yet made a final decision. This appointment needs to be confirmed by the Senate, which will not reconvene until September. To become the chairperson in May next year, the nominee needs to go through three rounds of confirmation procedures: first, to be confirmed as a director, then to be confirmed as the chairperson, and finally to be confirmed for a new 14-year director term. The range of candidates is gradually becoming clear According to informed sources who disclosed to the media, Sean Hannity and Chris Ruddy, the CEO of Newsmax, once discussed with Trump the idea of nominating Treasury Department's Bessent as the next chairperson of the Federal Reserve. But in an interview with CNBC on Tuesday, Trump said he had removed Bessent from the list of potential candidates for the Federal Reserve chair, saying the latter "wants to remain in the current position." Steve Bannon privately recommended Judy Shelton, a former economic advisor, to Trump to replace Kugler. During his first term, Trump nominated Shelton as a member of the Federal Reserve Board, but she failed to receive confirmation from the Senate. Media reports, citing sources close to the government, said that if Trump decides to fill the position with his preferred successor as the next chairperson as soon as possible, Kevin Hassett, the current director of the White House National Economic Council, is the clear frontrunder. Investment manager Mark Spindel called Hassett "the easiest to get confirmed and the most loyal" person. Trump confirmed in an interview with CNBC that Hassett and former Federal Reserve Governor Walsh are both among the four final candidates to succeed Powell. The difficult problem of balancing independence and loyalty Analysts point out that winning this "quasi-chairperson" position could be a double-edged sword. To gain and maintain Trump's support, candidates may need to publicly challenge Powell and his colleagues, especially those officials who are more cautious about cutting interest rates due to concerns over high inflation. But doing so might alienate the committee members, whose support is crucial after he becomes the chairperson. Laperriere believes that anyone nominated to fill Kugler's seat and audition for the position of chair faces the risk of expressing loyalty to Trump's preference for interest rate cuts and undermining their perception of independence: "Whoever this candidate is, is a damaged commodity." " Laperriere also warned that the Federal Reserve would eventually face a difficult choice of whether to cut interest rates. If the public begins to believe that the Federal Reserve makes decisions based on political loyalty rather than objective analysis, the Federal Reserve may lose its credibility: That day is coming, almost in any case. Do you really want a Federal Reserve chair who is held back by this? As an alternative, Trump may also decide to temporarily appoint an outspoken critic of the Federal Reserve and then replace him with the chairperson he has chosen next spring. In an interview on Tuesday, Trump said that he had two candidates in mind who were suitable for this approach. Another option is to appoint a current director as the chairperson. Analysis indicates that the most likely internal candidate is Waller, the governor appointed by Trump five years ago, who had a face-to-face talk with Bessent about the position two weeks ago and voted against the Fed's decision to keep interest rates unchanged last week. Risk Warning and Disclaimer The market involves risks. Please invest with caution. This article does not constitute personal investment advice and has not taken into account the individual user's specific investment objectives, financial situation or needs. Users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Any investment made based on this is at your own risk.
2025-08-06 -
View detailsThe Hong Kong Monetary Authority has intervened three times a week to stabilize the foreign exchange market amid southbound outflows and arbitrage
Under the dual pressure of southbound capital outflow and arbitrage trading, the Hong Kong Monetary Authority of China intervened three times within a week to stabilize the foreign exchange market. On Tuesday, the Hong Kong Monetary Authority purchased HK $6.429 billion (about US $819 million) as a continuation of a series of measures to maintain exchange rate stability. Previously, the Hong Kong Monetary Authority had intervened in the foreign exchange market twice, on August 1 and July 30. According to media calculations, the Hong Kong Monetary Authority withdrew a total of HK $13.89 billion in liquidity from the market by purchasing Hong Kong dollars within a week to maintain the exchange rate of the Hong Kong dollar against the US dollar within the range of 7.75 to 7.85. Southbound funds net sold approximately 18.1 billion yuan on Monday, marking the largest single-day net selling amount since May 12th, intensifying the downward pressure on the Hong Kong dollar. Meanwhile, the significant interest rate differential between Hong Kong and the United States has continuously attracted traders to short the Hong Kong dollar and instead purchase US dollar assets with higher yields. The outflow of southbound funds is superimposed with seasonal factors Carie Li, a global market strategist at DBS Bank, pointed out: "Southbound capital outflows and weakened seasonal demand may make the pressure to sell the Hong Kong dollar dominant." She said that the huge spread would keep arbitrage trading active and she expected that there might be more intervention actions in the future. The latest market intervention by the Hong Kong Monetary Authority is a continuation of a series of actions to curb the decline of the Hong Kong dollar since June. These actions are partly in response to the consequences of curbing the appreciation of the Hong Kong dollar earlier this year. The Hong Kong Monetary Authority's earlier strategy of selling Hong Kong dollars led to a significant drop in local interest rates relative to those in the United States, thereby exerting depreciation pressure on the Hong Kong dollar. Expectations of interest rate cuts in the United States may offer relief However, the recent turnaround brought about by the US job market data may offer the Hong Kong Monetary Authority some breathing space. Last week, the non-farm payroll data released by the United States fell short of expectations, triggering market expectations that the Federal Reserve will accelerate interest rate cuts. If the interest rate differential between the two places Narrows, it may alleviate the pressure on the Monetary Authority. Wee Khoon Chong, senior Asia-Pacific market strategist at BNY Mellon, said: "The buying of USD/HKD may be driven by ongoing carry trades. If the market factored in expectations of further interest rate cuts by the Federal Reserve after weak U.S. employment data last week, then this situation may not last long." Under the linked exchange rate system, the monetary authority of Hong Kong is responsible for intervening when the exchange rate of the Hong Kong dollar against the US dollar touches the boundary of the range of 7.75 to 7.85. At present, as market dynamics continue to evolve, the Hong Kong Monetary Authority will continue to face the challenge of maintaining monetary stability, while also having to balance the local interest rate environment with the needs of economic development. Risk Warning and Disclaimer The market involves risks. Please invest with caution. This article does not constitute personal investment advice and has not taken into account the individual user's specific investment objectives, financial situation or needs. Users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Any investment made based on this is at your own risk.
2025-08-05 -
View detailsThe script for the second half of the global market: tariffs will fall, there will be no TACO, and fundamentals will determine everything.
According to the Chui Feng Trading Desk, Nomura's latest report indicates that two negative catalysts - the ultimately implemented tariffs that were higher than expected and the unexpectedly weak US July non-farm payroll report - have emerged. The Asian market, especially Japan and South Korea which have a high degree of correlation with the US market, will face pressure in the short term. The report clearly states that the upside potential for MSCI Asia (excluding Japan) by the end of this year is already very limited. The issue of US tariffs, which has been closely watched by the market, has finally been settled. The Trump administration eventually fulfilled its threat And there was no situation of "TACO-Talk And Cut Offer". The economies that reached an agreement: the European Union, South Korea and Japan were granted a 15% tariff rate, along with significant investment commitments. The tariff rates in Malaysia and Thailand have been reduced from the expected 24% and 36% to 19% respectively. India's unexpected blow: The Indian market has suffered a negative surprise, being subject to a 25% tariff, far exceeding the market expectation of 15-20%, along with unspecified "additional penalties". This constitutes a short-term bearish factor for the market. China-us Negotiations: According to CCTV News, China and the United States held a new round of economic and trade talks in Stockholm, Sweden. According to the consensus reached during the talks, both sides will continue to push for the extension of the 24% portion of the US reciprocal tariffs that have been suspended and China's countermeasures for 90 days as scheduled. The sharp cooling of the US job market has sounded the alarm In July, the number of new non-farm payrolls was only 73,000, far lower than Nomura's forecast of 120,000 and the market consensus of 104,000. The data for May and June were cumulatively revised down by nearly 260,000, which brought the average number of new jobs added over the past three months down to 35,000, the lowest level since the summer of 2020. The unemployment rate rose to 4.248%, the highest since October 2021. Capital flows have reversed, putting pressure on emerging Asian markets Foreign capital ended consecutive inflows: After seven consecutive weeks of net inflows, foreign investors turned to net selling of emerging Asian stocks (excluding Chinese stocks) last week, with a net outflow of 652 million US dollars. The "American exceptionalism" may reappear: Globally, emerging market ETFs have seen a moderate net outflow for the first time in eight weeks, while offshore ETFs focused on the US have recorded net inflows in three of the past four weeks, indicating initial signs of capital flowing back to the US. This trend indicates that when global risk aversion sentiment heats up, funds tend to withdraw from emerging markets with higher risks, and Asian markets, especially India, have directly felt the pressure of capital outflow brought about by tariff shocks. The data from the second-quarter earnings season of 2025 further confirmed the challenges faced by the fundamentals. Strong earnings performance in the US: In contrast, the US market has demonstrated resilience. After 66% of the S&P 500 companies reported their earnings, the year-on-year growth rate of second-quarter profits reached 10.3%, far exceeding the 6.4% expected a week ago.
2025-08-04 -
View detailsIs the market too optimistic? Goldman Sachs warns: Key indicators have returned to the eve of the 2007 financial crisis!
Goldman Sachs credit strategists urged clients to hedge risks as global corporate bond yield spreads narrowed this week to their lowest level since 2007. According to the Bloomberg Index, as of Thursday this week, the yield spread of global investment-grade corporate bonds has narrowed to 79 basis points, the lowest level since July 2007, which was just before the outbreak of the global financial crisis. On July 31, Eastern Time of the United States, a team led by Lotfi Karoui, the chief credit strategist of Goldman Sachs, released a report stating that compared with March and April, the current trade policy is significantly more predictable, which enables the market to significantly lower the risk pricing for an economic recession. This policy clarity helps investors reassess risks and narrow credit spreads to pre-financial crisis levels. But Goldman Sachs cautioned the market that market participants should not overlook potential risk factors due to the current optimism. Goldman Sachs strategists pointed out in a report that although market sentiment has improved, there are still sufficient sources of downside risk in the market, and it is worth retaining a certain hedging position in the investment portfolio. These risks include that economic growth may further fall short of expectations, deflationary trends may weaken, or market concerns over the independence of the Federal Reserve may heat up again, which could trigger a significant rise in long-term yields. Furthermore, despite the continuous narrowing of credit spreads and the S&P 500 index hitting a record high this week, indicating market optimism, Federal Reserve policymakers have not signaled an upcoming interest rate cut, suggesting that the Fed still needs more data to ensure that inflation risks do not persist. Moreover, the Federal Reserve also lowered its forecast for US economic growth this week, citing a slowdown in economic activity. However, Goldman Sachs economists still expect the Federal Reserve to cut interest rates by 25 basis points in September, October and December respectively, and to do so twice more in 2026. Goldman Sachs added that although negative news related to tariffs is no longer the main driver of risk sentiment at present, the impact of tariffs on different links in the supply chain will lead to performance divergence among companies and become a new source of market risk. Risk Warning and Disclaimer The market involves risks. Please invest with caution. This article does not constitute personal investment advice and has not taken into account the individual user's specific investment objectives, financial situation or needs. Users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Any investment made based on this is at your own risk.
2025-08-01