Author: Daniel Chang

A preview of the upcoming day in Asian markets. Markets have made a strong recovery from recent volatility, with growing indications that the turbulence was largely due to the unwinding of major leveraged positions, such as yen-funded carry trades, rather than deeper concerns about global economic growth. All eyes are now on Wednesday’s U.S. inflation report, which has the potential to challenge the market’s newfound stability. The July Consumer Price Index (CPI) figures may not show significant improvement from the previous month. However, as long as there are no major surprises, investors could still maintain hope that the Federal Reserve…

The likelihood of U.S. interest rate cuts has surged following the release of a tamer-than-expected inflation report, which had kept financial markets on edge. Wednesday’s Consumer Price Index (CPI) data revealed a moderate increase in prices for July, with annual inflation dropping below 3% for the first time in nearly three and a half years. In the wake of the CPI report, investor discussions have shifted from whether the Federal Reserve will cut rates at its September 17-18 meeting, to how substantial the cut might be. Market participants are leaning toward a modest 25 basis point reduction, though there remains…

The uncertainty surrounding Prime Minister Fumio Kishida’s resignation is likely to cause the Bank of Japan (BOJ) to pause its gradual interest rate hikes, but not to completely halt its plans to increase rates from near-zero levels. Analysts suggest that the duration of this pause will be influenced by the outcome of the ruling party’s leadership race and the impact of market movements on the political discourse regarding the pace of rate hikes. Kishida, who had appointed Kazuo Ueda as BOJ governor last year, recently announced that he would not participate in the ruling Liberal Democratic Party’s (LDP) leadership contest…

On Tuesday, Super Micro shared a positive revenue outlook for the upcoming quarter, even though its first-quarter earnings didn’t meet expectations. The data center company also revealed plans for a stock split to take advantage of the increasing demand for artificial intelligence hardware, which is essential for AI applications. Super Micro announced a 10-for-1 forward stock split, scheduled to begin trading on October 1. For the fiscal first quarter, the company projected non-GAAP net income per diluted share to be between $6.69 and $8.27, with sales ranging from $6.0 billion to $7.0 billion. This compares to Wall Street’s forecast of…

Shigeru Ishiba, a prominent contender for Japan’s upcoming prime ministerial election, expressed support for the Bank of Japan’s (BOJ) gradual interest rate increases. He believes this shift in monetary policy could lower prices and enhance industrial competitiveness. “The BOJ is on the right track by aligning with global trends towards positive interest rates,” Ishiba, a senior member of the ruling party, stated in an interview with Reuters. “While the negative impacts of rate hikes, such as stock market volatility, are being emphasized, we should also acknowledge their benefits, like reducing import costs and boosting industrial competitiveness,” he added. Japan’s ruling…

The UK housing market is poised for an upswing in sales in the coming months, following the Bank of England’s interest rate reduction and the new government’s focus on the housing sector, according to a survey released on Thursday. The Royal Institution of Chartered Surveyors (RICS) reported that its sales expectations index for the next three months reached its highest level since January 2020, just before the onset of the COVID-19 pandemic in Britain. “The recent base rate cut by a quarter-point and the new government’s emphasis on promoting housing development seem to have positively influenced the market sentiment,” stated…

U.S. Treasury yields rose on Wednesday following weak demand for a $42 billion sale of 10-year notes and a surge in corporate debt issuance as risk appetite improved. This week, the focus is on supply as traders await fresh economic data for more insights into the U.S. economy’s strength. Yields had fallen to over one-year lows after July’s employment report showed an unexpected rise in the unemployment rate and lower-than-expected job gains, raising recession fears. Stock market declines, partly attributed to traders unwinding popular dollar/yen carry trades (selling the Japanese currency and buying U.S. assets), had driven demand for safe-haven…

China’s interbank bond market is tightening regulations, with authorities emphasizing that trading accounts must not be borrowed or transferred. This move is intended to prevent non-compliant transactions, protect market integrity, and reduce credit risks, according to a report from a central bank-affiliated publication. In an article published on Friday by Financial News, the central bank-backed newspaper highlighted the growing concern over the potential consequences of improper account use. This follows a recent investigation by Chinese regulators into the trading activities of smaller financial institutions, as the People’s Bank of China (PBOC) intensifies efforts to moderate a rapid surge in the…

Federal Reserve policymakers are increasingly optimistic that inflation is easing enough to justify future interest rate cuts, with their decisions on the timing and size of these cuts guided by economic indicators rather than stock market volatility. This was the consensus among three U.S. central bankers who spoke on Thursday, although they expressed slightly differing views on the current state of the economy. Their comments come just over a week after the Fed chose to maintain its policy rate but hinted at potential reductions as early as next month. Last Friday’s report of a rise in the U.S. unemployment rate…

Evercore ISI has warned that the Federal Reserve’s persistent “higher for longer” interest rate policy increases the risk of emergency cuts between scheduled meetings if economic conditions worsen. While the Fed prefers to avoid such intermeeting cuts, Evercore ISI suggests that delaying a shift toward a more dovish stance could necessitate drastic measures if markets continue to decline. The pressure for the Fed to implement significant rate cuts is growing following recent economic data, including the July payrolls report and manufacturing figures, which have heightened concerns about an accelerated economic slowdown. However, data from Monday indicates that the U.S. might…