Market Review
Key News
China Market
1. The People's Bank of China Cuts Interest Rates Again
The People's Bank of China, as announced by the Interbank Lending Center, unexpectedly cut the one-year Loan Prime Rate (LPR) to 3.45%, down 10 basis points from the previous 3.55%, which, although higher than the market's general expectation of 3.40%, represents a 10 basis point reduction from the previous rate. The five-year LPR remains unchanged at 4.2%. This marks the LPR's second adjustment in 2023, following a 10 basis point reduction in June.
2. Strengthening Credit Support for Reasonable Consumption
The Ministry of Commerce, the National Development and Reform Commission, and the Banking Regulatory Commission have jointly stated that they will promote cooperation between financial institutions and goods suppliers, increase credit support for reasonable consumer spending on automobiles, home appliances, and home furnishings, and optimize the interest rates and fees for reasonable consumer credit. They support goods suppliers in creating a credit application environment for consumers, such as offering post-payment options and waiving deposits.
3. Several Chinese Cities Plan to Recognize and Share Housing Provident Fund Loans
Fourteen cities including Xi'an, Baoji, Xianyang, Yuncheng, Linfen, Yan'an, and Sanmenxia, have signed a cooperation agreement to jointly promote high-quality development in the Guanzhong Plain urban area. They will recognize each other's deposit information and share home loan benefits while respecting differentiated loan policies.
Overseas Markets
1. Real Yield on 10-Year US Treasury Bonds Hits New Record Since 2009
The real yield of US 10-year Treasury Inflation-Protected Securities (TIPS), adjusted for inflation and reflecting the real cost of funds in financial markets, has surpassed the 2% mark for the first time since 2009. The yield on US 30-year Treasury Inflation-Protected Securities (TIPS) has hit a new high since 2011. Data indicates that, as of now, TIPS have almost erased all their gains this year, with the Bloomberg US Treasury Inflation-Linked Bond Index cutting its annual gain from 4.3% in April to approximately 0.2% currently.
2. Goldman Sachs Warns of Continuing Risk of a US Government Shutdown
The debt ceiling crisis that caused a stir in the market in the first half of the year is still fresh in mind, and the US is once again facing the threat of a government shutdown in the second half. Alec Phillips, Goldman Sachs' chief US political economist, warns that if a budget appropriation agreement for the federal government is not reached by September 30, the last day of the current fiscal year, the US government could still face a temporary shutdown later on.
3. Bank of Japan's Bond Purchasing Speed Sets New Record
According to data published by the Japan Securities Dealers Association, overseas investors sold off 1.36 trillion yen in 10-year Japanese government bonds in July, setting a new record for sales since January this year. However, Bloomberg expects the Bank of Japan's bond purchasing scale to reach 124.6 trillion yen (857 billion USD), a 12% increase over 2022 and higher than the peak level of the Yield Curve Control (YCC) bond purchasing program initiated by the Bank of Japan in 2016.
4. Meeting Between Biden and Saudi Crown Prince Could Facilitate Major Agreement
President Biden is considering meeting with Saudi Crown Prince Mohammed bin Salman during the G20 summit in New Delhi next month. A meeting between the two leaders could significantly advance negotiations between the White House and the Saudi government. Previously, the White House was exploring a significant deal with the Saudi government, potentially including security assurances for Riyadh and a normalization agreement between Saudi Arabia and Israel.
