In today’s briefing:
- CX Daily: China Plans to Create Vast New Financial Regulator
- Money Market Funds – Bank Profitability Pressure and the Great Recession Delay
- UK: Hawkish Tide Not Turning Yet
- AFC Iraq Fund February 2023 Update: “Dinar Revalued Upwards by 10%, Strong Gains for the Fund”
CX Daily: China Plans to Create Vast New Financial Regulator
Regulators / China plans to create vast new financial regulator
Foreign policy / China warns of ‘catastrophic consequences’ of U.S. zero-sum strategy
Budget / China sees land sales flat at $1.1 trillion this year
Money Market Funds – Bank Profitability Pressure and the Great Recession Delay
- After a massive rise in short-term yields, Money Market Funds compete with both other asset classes and Commercial Bank Deposits.
- Commercial banks face a dilemma. Raise interest rates at the cost of profitability. Or lose deposits and face higher risks. The dilemma explains why the Fed is not really tightening.
- Second, Money Market Fund and Commercial Bank flows are yet another example of how unprecedented stimulus following Covid adds to the ‘Great Recession Delay.’
UK: Hawkish Tide Not Turning Yet
- Market participants have renewed their hawkish views of inflation and monetary tightening in 2023. Hopes for a dovish pivot proved premature.
- Firms’ expected price rises have lost some skew but are converging around 5%, as are wage settlements. Inflation expectations appear to be anchoring at excessive highs.
- Frontloaded monetary tightening remains necessary with hawkish risks to a 4.5% BoE peak. The dovish turn should be swift and lucratively steep, but it isn’t here yet.
AFC Iraq Fund February 2023 Update: “Dinar Revalued Upwards by 10%, Strong Gains for the Fund”
- The AFC Iraq Fund, and its benchmark the Rabee Securities RSISX USD Index, “skyrocketed” +23.3%, +24.9% respectively in February.
- For the year, the AFC Iraq Fund is up 22.6%, outperforming the index’s increase of 18.8%.
- February’s gain once again illustrates the diversification benefits that the AFC Iraq Fund and Asian frontier markets offer to investors since the performance of the AFC Iraq Fund is already well ahead of global benchmarks two months into the year.
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