If the Biden admin moves the needle first in the flared-up trade conflict, China may decide to let go of the USD/CNY exchange rate in response. Things are heating up again!
Steno Signals #97 – 5 reasons why the CNY will be devalued next week and how to trade it
The list of triggers for a material devaluation of the CNY keeps getting longer and action is probably imminent. The question is how markets will react to such an event and whether it will prove to be a new trend.
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Portfolio Watch: No respite for Asian FX.. How to deal with it?
The accelerating USD vs Asian FX trends will impact markets across assets into next week. What’s cheap and what’s expensive if the CNY is getting devalued in the coming weeks?
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Steno Signals #96 – A major devaluation of the CNY could be imminent
China is preparing for something major. That seems increasingly obvious judging from the stockpiling of important resources. Could it be that they are preparing a major one-off devaluation of the CNY?
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Something for your Espresso: You shall not pass!
We see intervention in Asian FX markets from the morning, but could such activity turn into a headache for the Fed? Meanwhile, European inflation data is key during the shortened Easter week!
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China Watch: From a controlled demolition to another round of damage control?
The drivers of the recent sell-off in Chinese equities mirror the weakness of the Real Estate sector and the two are inherently interlinked. The question is whether the leadership will respond to the sell-off in the same way they did during the Real Estate crisis last year. In such case, fundamentals will remain unadressed. Read our takeaway below
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EM by EM #37: The Taiwan election & the Trade war
The upcoming Taiwan election is just one chapter in the larger narrative of US-Sino relations, which is poised to return to the forefront of financial markets in the 2024 US election year. Will Taipei further contribute to the rising tension?
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EM by EM #28 The Truth Hidden in Plain Sight
The Chinese Stimulus will likely prove to be false flag and Yellen & Powell looks to have killed the USD streak. Read below for our thoughts on it and how we will likely play it
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EM by EM #27 Not a Bazooka, but a Pumpgun
The long awaited stimulus package is here! But it is anything but overwhelming… Read our takeaways here
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5 Things We Watch: BoJ, JPY & CNY, Monetary trends, UST selloff & Biden’s visit in Israel
While tension keeps mounting in the Middle East, we’ve decided to broaden the global macro-horizon. From rising pressures in Japanese policy and the preceding Asian currencies to monetary trends in EUR and USD, and everything in between. We break down this week’s most noteworthy developments.
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China Watch – Foreign Direct Investment & Capital Controls
Despite communicating to cure the CNY to prevent capital flights, the PBoC is likely going to allow the exchange rate to float even higher than now to boost foreign investments, which is the only medicine that can cure the Chinese economic disease.
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FX Watch: The world needs a Riyadh accord more than a Plaza Accord 2.0
Lots of talk around a too-strong USD, especially in Asian markets. The issue is that the move in the USD is driven by BOTH monetary policy and relative energy balances. It is hard to make a Plaza Accord without a Riyadh accord.
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EM by EM #21 Why China is uninvestable yet tough to short
7.30 was the line in the sand but can the Chinese defend their thench? We find it unlikely. But the battleground is not a safe place yet
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Something for your Espresso: The Japanese fear of becoming a release valve
Masato Kanda threatens with intervention in JPY as the Japanese case risks becoming the release valve for pressures in China. Equity markets behave as we expected given the renewed pressure >7.30 in USDCNY.
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Macro Strategy Nugget: Why USDCNH > or < 7.30 is everything you need to watch
USDCNH above or below 7.20 changes the global macro regime and leads to a rotation in case it continues. Are you prepared accordingly?
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Something for your Espresso: You shall not pass!
Strong signal in the Yuan fixing this morning and Asian FX recovers. Risk appetite struggles still and markets are probably scared that the PBoC cannot defy gravity.
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Something for your Espresso: USDCNY is now the global bellwether (again)
The panic will subside if the PBoC manages to defend the 7.30 handle in USDCNY. Could we reach “peak China panic” during today’s trading? We look forward to it alongside the FOMC meeting minutes in our morning report.
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China Watch: The People’s Bank Pickle – is 7.30 the line in the sand?
The PBoC rate cuts are not a surprise to us as the pressures facing China are intensifying. But where does it leave monetary policy going forward?
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Outside the Box #10 What if China favors bridges over credit cards once more?
The West sent checks, while China focused on supply-side policies in response to Covid. But what will Beijing do now?
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5 Things We Watch: Brazil, Italy, CNY, DAX and EU Banking Crisis
Is Brazil a hideout in the current environment? How will Italy refinance its debt? Is it time for CNY to head lower? Have we seen the top in DAX? And will the banking crisis move to Europe? Find the answers here.
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Trade Alert: Five trades added to our portfolio
Our portfolio is live, and we have added USDCNH, long Japanese equities, long 2yr USTs, long EM Local Govies and the FOMO AI trade. Details are attached here.
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China Watch #2 – Reopening; Here’s how to play it
China is de facto reopening by now as we rightfully forecasted a few months back, but is a reopening equal to good news straight away? Not necessarily. Here is our playbook for the Chinese reopening.
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Steno Signals #24 – Bipolar China
A rising case count is ultimately the only trigger cable to end to the Chinese zero Covid regime, why the possibility of a reopening is currently INCREASING.
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