In today’s briefing:
- Out of the Box #14: 4 Reasons Why Curve Steepening Is Now on the Cards
- Fed Lending Survey: ‘Stay Away from High Yield Bonds!’
- BoE: Obfuscated Hiking Path
- CX Daily: China Pushes Electric Future for Inland Shipping
- Central Bank Vows Further Mortgage Easing to Support Housing
- Out of the Box #15: What if Its the Labour Market that Drags Housing Down This Time?
- Injective Protocol: Unlocking the Potential of Decentralised Trading
Out of the Box #14: 4 Reasons Why Curve Steepening Is Now on the Cards
- In our “out of the box” series, we aim at being ahead of the current consensus narrative and think of the next theme that could drive price action before anyone else has given it any noteworthy attention.
- This week we look at four reasons why the curve steepener is now the trend to watch! There are four reasons for the USD curve steepening now
- The issuance profile will move towards longer durations, the BoJ decision has decreased Japanese incentives to buy USTs, the Manufacturing rebound will add to steepening pressures, positioning is already loaded with duration
Fed Lending Survey: ‘Stay Away from High Yield Bonds!’
- A further tightening of US lending standards point to negative loan growth and GDP growth.
- In addition, the latest Federal Reserve Loan Survey suggests the high yield default rate will rise fivefold(!) compared to last year.
- Yet, high yield bond spreads remain in la-la land, reflecting zero odds of a US recession or tighter lending standards.
BoE: Obfuscated Hiking Path
- The BoE hiked by 25bps in Aug-23, thereby siding with the dovish side of the divided consensus. It belatedly justified June’s forceful hike as a reassessed central outlook.
- Unfortunately, the Governor hasn’t learned to communicate effectively. Multiple paths can achieve the target for any information set, and he won’t reveal a preference.
- We still expect 25bp rate hikes in September and November, with policy staying tight for a long time. The BoE’s obfuscation of the outlook does not mean it’s done hiking.
CX Daily: China Pushes Electric Future for Inland Shipping
- Ships / In Depth: China pushes electric future for inland shipping
- Torrential rains /: North China city pleads for emergency aid after flood
- Mortgage /: Central bank vows further mortgage easing to support housing
Central Bank Vows Further Mortgage Easing to Support Housing
- China’s central bank pledged to step up mortgage easing to support homebuyers, signaling further efforts to bolster the ailing property market.
- Officials of the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange vowed Tuesday to implement precise and differentiated housing credit policies based on the specific conditions of each city and continue guiding commercial banks to relax residential mortgage rules.
- Lenders should adjust mortgage rates for existing loans in an orderly manner to support people’s housing needs, the officials said at a meeting to outline their agenda for the second half of the year.
Out of the Box #15: What if Its the Labour Market that Drags Housing Down This Time?
- Main Points: 1) The US economy is looking strong for now.
- Crude drawings and solid job numbers keep coming in etc, 2) My view is we will see a recession around Q1 and that layoffs will be manifested in small buis/service sector 3) The FED and the Treasury will have a harder time responding this time around given less fiscal and monetary room making a bailout of relevant creditors costlyIn my inaugural piece (available here), I highlighted an economic climate of distortion, with winners and losers due to the monetary policy regime and yield curve inversion.
- I argued that strong businesses with robust balance sheets would emerge victorious over smaller local businesses, startups, private equity, and the like.
Injective Protocol: Unlocking the Potential of Decentralised Trading
- Injective is the first decentralised exchange-focused layer-1 blockchain platform.
- Integrated with the Cosmos ecosystem, it was custom-built to host Decentralised Exchanges (DEXs) that aim to shape the future of crypto trading.
- The platform offers developers a user-friendly environment equipped with plug-and-play financial infrastructure components, facilitating the seamless creation of highly efficient, fast, and cost-effective dApps.
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