CHINA: Country Wrap: Moody's Affirms China's Rating
May-27 05:23
- Moody's decision to affirm China's A1 ratings on Monday is a positive reflection of the improving prospects for the country's economy, the Chinese Ministry of Finance said. Since the fourth quarter of last year, the Chinese government has implemented a series of macroeconomic policies, economic indicators have improved, market expectations and confidence have stabilized, and the medium and long-term sustainability of debt has improved, the ministry said. (source China Daily)
- China's industrial firms saw a 3% increase in profits in April, driven by a government trade-in program and demand for manufactured products despite higher US tariffs.
- Improving earnings are crucial to bolstering business confidence, and stronger corporate balance sheets could reduce the urgency of additional stimulus by Beijing to meet its annual growth target. The government's program to subsidize equipment upgrades and consumer goods has boosted demand for industrial products, with manufacturing leading profit gains among industrial firms, particularly in high-tech sectors like artificial intelligence-enhanced manufacturing. (source BBG)
- China's major bourses were all lower today with the Hang Seng down -0.18%, CSI 300 -0.55%, Shanghai -0.33% and Shenzhen down -0.65%
- Yuan Reference Rate at 7.1876 Per USD; Estimate 7.1869
- Bonds continue their period in a tight range with the CGB 10YR at 1.69%
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS: Extraordinary Measures And Cash Look Sufficient To Head Off X-Date
Apr-25 20:32
Treasury has about $164B in "extraordinary measures" available as of April 23 to avoid hitting the debt limit, per its regular report out Friday. That's out of a maximum total of $375B (they have used $211B).
- With Treasury cash looking healthy (around $600B), that's a fair amount of dry powder to get through the summer months to wait out the debt limit impasse. Tax receipts have looked strong with tariff revenues also starting to boost cash flows, further reducing the near-term urgency to adjust bond issuance.
- This has also helped push back analyst “x-date” expectations to later in the summer/September. We expect to hear from Treasury about its own x-date assumptions next week.
US TSYS: Treasury Market Trading Stayed Orderly In April: Fed Report
Apr-25 20:25
Liquidity across financial markets including the Treasury market deteriorated after President Trump's April 2 reciprocal tariffs announcement but market functioning was generally orderly, according to the Federal Reserve's semiannual report on financial stability, released Friday. (PDF link is here)
- Treasury market liquidity has been poor for years and yields were particularly volatile in early April, contributing to a deterioration in market liquidity, the Fed said.
- Nevertheless "trading remained orderly, and markets continued to function without serious disruption," according to the report, which looked at information available as of April 11.
FED: Ex-Gov Warsh: Fed Has Failed To Satisfy Price Stability Remit
Apr-25 20:22
From our Washington Policy Team - Some fairly sharp words today from ex-Fed Governor Warsh on the central bank (who for what it's worth is seen by betting markets as by far the frontrunner for the next Fed Chair):
- The best way for the Federal Reserve to safeguard its independence is for policymakers to avoid expanding the institution's role over time, including wading into policy areas that are outside its core mission, former Fed Governor Kevin Warsh, a leading contender to replace Jerome Powell as chair next year, said Friday.
- "I strongly believe in the operational independence of monetary policy as a wise political economy decision. And I believe that Fed independence is chiefly up to the Fed," Warsh said in a speech at a Group of Thirty event on the sidelines of the IMF meetings. "Institutional drift has coincided with the Fed’s failure to satisfy an essential part of its statutory remit, price stability. It has also contributed to an explosion of federal spending." His speech made no mention of Trump's tariffs or the appropriate monetary policy to deal with them.
- He said the ideas of data dependence and forward guidance widely adopted by Fed officials are not especially useful and might even be counterproductive.
"We should care little about two numbers to the right of the decimal point in the latest government release. Breathlessly awaiting trailing data from stale national accounts -- subject to significant, subsequent revision -- is evidence of false precision and analytic complacency," he said.
"Near-term forecasting is another distracting Fed preoccupation. Economists are not immune to the frailties of human nature. Once policymakers reveal their economic forecast, they can become prisoners of their own words. Fed leaders would be well-served to skip opportunities to share their latest musings."
