Post Tagged with: "China"
Underwhelming Policy Response Continues
Markets stable but tone remains fragile. SNB expanded its sight deposit target; no EUR/CHF peg. BoE’s decision to stay on hold was unanimous. New measures announced by China boost CNY internationalization and integration with
Andy Xie Recommends China Diversify Out Of Treasuries
The Chinese foreign reserve accumulation is really about the exchange rate peg. As long as the Yuan’s dollar peg remains near present levels, the current account imbalance will result in an accumulation of dollar reserves. Former Morgan Stanley Economist Andy Xie says the Chinesse do have a choice as to what US dollar assets to buy, even so. He suggests the US diversify out of Treasuries and into other US dollar assets
Dagong cuts US sovereign rating one level to A, on par with Russia and South Africa
Patrick Chovanec talked to Bloomberg earlier today about the Chinese rating agency Dagong’s downgrade of US sovereign debt to Single-A. Chovanec says that Dagong is ‘hyper-senstive’ to US risk
Will the World Still Buy US Debt?
Is the PBoC going to stop buying US treasuries? The debt ceiling debate and a potential default have brought this question back into the spotlight. The theoretical and the real world answer to concerns about China and US debt is the same: China will not dump Treasuries. China’s purchase of US treasuries is simply a
China: no hard landing, but no solution
I have been arguing for a while that as long as the Chinese government retains its capacity to raise debt we are not going to see a sharp slowdown in economic growth – at least until 2013. Any indication that the economy is slowing too quickly will be met with a relaxation of credit controls, and the concomitant rise in investment will spur growth
Pre-Market: Potential US Budget Deal Brings Back Risk Appetite, But Pitfalls Lurk
US leaders agree on budget deal, but House vote poses event risk ahead of August 2 deadline. Euro zone periphery benefits from improved market sentiment, but remains vulnerable. Equities and EM FX firm today on US news and stronger than expected China July
Chart of the Day: China’s Yield Curve flattening
The Chinese 2-5 year swap spread has flattening to 1 basis point. The last time it was so flat was
How fast will the Chinese revalue to dump dollars?
If the Chinese are serious about their anti-US rhetoric, they will have to do a lot more on the currency front. First and foremost, they need to move more aggressively to a basket peg that allows bilateral Yuan currency rates to move as the relative value of currencies in the basket move. Pegging to a basket that included currencies like the British Pound, the Euro, the Japanese Yen, the Brazilian real, or the South Korean Won would instantly get rid of the excessive exposure to the US dollar. Beyond that allowing the currency to appreciate faster or to float would be the next most logical moves
Roach and Roubini: Chinese have lost confidence in America’s ‘dysfunctional economic stewardship’
Separately, both Nouriel Roubini and Stephen Roach, two leading American economists with differing views on the Chinese domestic economy have pointed out the concern China has with the dysfunctional US political system. Increasingly, the Chinese are showing signs that they are not pleased with tying up so much of their wealth in US dollars. How the Chinese plan to act upon their concerns is another matter, however
Peak Coal and Jeremy Grantham’s Clarion Call on Natural Resources
Coal is one of many natural resources which are in short supply. This article provides one example from India. Jeremy Grantham believes that peak resources is a phenomenon which will pose problems for the global economy in the future. He has written a second consecutive quarterly note on peak resources that this time concentrates on the human suffering
Worrying weak macro trends in China, US and Europe
Economic growth warning signs are evident all around in recent data from the US, Europe and China. This should mean negative earnings surprises by Q3 earnings season
Dilemma over current account vendor financing
There seems to be an aggrieved sense on the part of creditor nations that after providing so much helpful funding to undisciplined debtors, the creditors are going to be left with losses. There is, they claim, something terribly unfair about the whole thing. To me this whole argument is pretty surreal. Not only have the creditors totally mixed up the causality of the process, and confused discretionary foreign lending with domestic employment policies, but an erosion in the value of the liabilities owed to them is an almost certain consequence of their own continuing domestic policies