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On August 21st, the 1-year Loan Prime Rate (LPR) was lowered from 3.55% to 3.45%, while the 5-year LPR remained at 4.20%. On August 15th, the Medium-Term Lending Facility (MLF) rate was lowered by 15 basis points (bp). The market had anticipated a 15 bp reduction in the 1-year LPR rate and a 20 bp reduction in the 5-year LPR rate. However, there isn't a clear...

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In July 2023, the year-on-year decrease in the Consumer Price Index (CPI) for residents in China was 0.3%, while the month-on-month increase was 0.2%. The Producer Price Index (PPI) for industrial producers in China showed a year-on-year decrease of 4.4%, and a month-on-month decrease of 0.2%. The cyclical fluctuations in commodity prices similarly affect the...

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The US added 324,000 jobs in June, once again far exceeding market expectations of 185,000 jobs, marking the fourth consecutive month of surpassing forecasts. Additionally, the previous figure was revised downward from 497,000 to 455,000 jobs. Hourly wage also continued to fall. This shows that the job market continues to exhibit resilience, which may help the...

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On July 24th, a meeting of the Chinese Political Bureau was held, and compared to the meeting in April, the overall tone was more positive. The meeting focused on large-scale consumer sectors such as automobiles, electronic products, and home furnishings, as well as service consumption sectors such as sports, leisure, culture, and tourism. There were some...

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Fitch downgraded the United States' highest AAA credit rating to AA+ in a report released early Wednesday Beijing time, reflecting its deteriorating fiscal situation. Fitch stated that over the past 20 years, the governance level in the United States has been eroded compared to countries rated "AA" and "AAA," as evidenced by repeated debt ceiling standoffs and...

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The Federal Reserve's stance on monetary policy in this meeting is broadly in line with expectations. In September, they will decide to maintain the option of raising interest rates and have denied the possibility of cutting rates within this year. The description of the economy is more positive now, as they no longer consider a recession as the baseline...

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Gold is a physical currency asset with zero credit risk, while credit currencies primarily carry two risks: one stems from central bank monetary policies leading to inflation risk, and the other comes from political risk, leading to the risk of delisting. As a result, gold primarily possesses two main attributes: hedging against inflation and serving as a...

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Data showed the U.S. CPI increased 0.5% last month, the CPI increased 6.4% YoY. Interest rate futures markets are now expecting the Fed's target rate to peak above 5.2% in July, from a current range of 4.50% to 4.75% which has a negative impact on gold. The yield on 10-year Treasury notes US10Y also rose to its highest since Jan. 3.

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With higher US Treasury yields and the US dollar picking up ahead of the FOMC rate decision tomorrow, I am expecting Gold to go even lower. Markets are already pricing in a 25bp hike, disregarding the Fed's narrative. DXY is also pushing higher, benefitting from a weaker Euro and Sterling as IMF warned about the UK economy.

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There were concerns that the U.S. federal debt will reach its legal limit, requiring her to take extraordinary measures just to keep paying the bills. From both an economic and a financial perspective, a failure to raise the debt ceiling would be an unmitigated disaster but harm may also be done by continuing to ignore deficits entirely or by subjecting an economy...

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The focus this week should be on China's reopening plans. Earlier this week, Reuters reported that China is set to announce 10 new COVID-19 management measures as early as Wednesday,” adding that “these supplements the 20 measures unveiled in November that set off a wave of covid-easing steps across the nation. However, we need to pay close attention to city...

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The Pound rallied against the dollar on expectations that the Federal Reserve could slow the pace of interest rate hikes and a new U.K. Government budget proposal. Earlier last week, minutes from the most recent FOMC meeting indicated that the U.S. central bank could ease the pace of interest rate hikes. The Fed had imposed a total of six interest rate hikes so...

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It has been a mixed week for risk assets, with oil and copper falling sharply on Chinese demand concerns. Markets are also trying to determine whether to lean towards the possibility of the Fed tilting to a more dovish stance amid expectations that inflation has peaked and in light of fresh concerns over China—something which weighed heavily on some commodities...

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The UK employment report was soft, with unemployment ticking higher to 3.5%, up from 3.4%. However, the wage growth continues to increase. Wages excluding bonuses rose to 5.7%, up from 5.5% and ahead of the consensus of 5.6%. Even with these 2 conflicting signs in the labor market, I think the BoE will continue to hike rates aggressively in order to bring down...

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As policy rate hikes continued to be the highlight, as I mentioned previously as well, we should continue to pay close attention to the labor market. Excess demand for labor should gradually fade but it is expected to remain well above the norm pre-covid and would continue to support strong job growth. We should pay more attention to Friday's job's report as it is...

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Japan intervened in the currency markets yesterday to strengthen the Japanese Yen. This resulted in a strong intraday rally of 4% in the Yen (from high to low) on Thursday. However, the intervention is nothing compared to large drop in Yen this year. Does it makes sense for intervention at this point in time? It is not only costly, it is also not a long term...

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Federal Reserve Chair Jerome Powell vowed to "keep at" their battle to beat down inflation, as the U.S. central bank hiked interest rates by three-quarters of a percentage point for a third straight time and signaled that borrowing costs would keep rising this year. The Fed foresees its policy rate rising at a faster pace and to a higher level than expected, the...

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Given that the Canada's CPI (MoM) is expected to be negative, it showed that the previous rates hike did help in driving prices down. However, is this short term? I think we need to look into the details - the Canadian property prices as well as commodities, oil in particular, to see if the prices for these two are down. Therefore, we ought to pay greater...