We saw the worst day in the Hang Seng since Lehman yesterday, but China used the opportunity to “feed the rally” with something to look forward to—a briefing on fiscal stimulus on Oct 12. Here is a comprehensive overview of the far-from-impressive stimulus announced thus far.
China’s upcoming fiscal policy briefing follows market disappointment over the lack of major stimulus, triggering a sell-off in Chinese assets. Confidence remains low despite cheap credit, and the PBoC’s limited measures offer little relief. The real solution lies in significant fiscal action to restore demand and stabilize the market.
One weak NFP report and rates could drop significantly, but a >200k report will likely challenge the front-end anchoring of the dot plot. There’s a lot at stake today, and we’ll guide you through how markets are positioned.
We’ve seen a significant spike in SOFR-EFFR spreads over the past 48 hours, which feels reminiscent of September 2019, though on a smaller scale. The Fed may be facing a liquidity problem and could feel tempted to address it.
How tight is the liquidity outlook for the month- and year-end? 2024 will bring a tight September quarter-end, but a much more benign year-end. Here’s why and how to manage it.
China is coming through with stimulus proposal after stimulus proposal, which has fueled the China rebound story once again. When is the turning point where stimulus is actually helping the economy? Few of their initiatives have worked previously, so it’s difficult to expect a different outcome this time around.
In the U.S, rising unemployment and faltering consumer confidence could push the Federal Reserve toward larger interest rate cuts. Over in China, despite temporary rallies, the country’s stimulus efforts seem insufficient, with many investors turning to cryptocurrencies amid a struggling economy. Meanwhile, geopolitical tensions between Israel and Lebanon, alongside Iran’s cautious positioning, add further uncertainty, but Iran’s weakened economy may push them toward diplomacy with the West.
With the growth outlook starting to align with a soft landing, the trends we are seeing across assets are starting to rhyme with the patterns we saw during the cutting cycle in 2019. If that has any historical value, what should we expect in the coming weeks?
With Powell taking the stage later, we have scanned through the asset universe to assess which trades that normally perform during a cutting cycle. Enjoy!
Macro Data Doesn’t Fully Support 25 bps Cuts at Every Meeting This Year
Ahead of the crucial NFP report we come with our suggestions for the figure and how markets will react in different scenarios, preparing you for how to trade the event.