Can China Make Big Changes?

On Sunday, October 16, the 20th Congress of the Communist Party of China will take place. This rare event occurs every five years and plays a significant role in the world’s second largest economy. Let’s discuss why this event is worth following. About the event The 20th National Congress of the Communist Party of China […]

Cliff Notes: The Enduring Nature of Inflation and Interest Rate Risks

Key insights from the week that was. Global inflation and its consequences for real income and interest rates were (yet again) the near sole focus of market participants this week. For Australia, the lens was our own Westpac-MI consumer sentiment survey. For the world, it was the latest IMF World Economic Outlook and, of course, […]

Some Unintended Consequences of the RBA's Pivot

The Westpac Melbourne Institute Index of Consumer Sentiment only fell by 0.9% from 84.4 to 83.7 in the October Survey. The Index remains in deeply pessimistic territory but could have been much weaker. As discussed when we released the results of the survey we examined the two samples over the four day period. The first […]

Data Probably Have to Be Extremely Strong to push US Yields Sustainably Beyond Barriers

Markets This week’s long-drawn countdown to the US September CPI finally resulted in a few hours of extremely volatile trading annex a historic intra-day market reversal, in particular in US equities. Hoped for signals of inflation topping out again didn’t materialize. Headline inflation hardly eased (0.4% M/M and 8.2% Y/Y, from 8.3%). US core inflation […]

A Remarkable Reversal of Bitcoin

Market picture Bitcoin added a modest 1.2% on Thursday, but this subtle result hides the real roller coaster. Bitcoin was losing 5% intraday, coming close to $18K, but following the stock market, it not only recouped its initial losses but also showed impressive gains. At the time of writing, the price is stomping around $19.8K. […]

USD/JPY Creeping Higher

USD/JPY continues to move edge higher and is up 1.6% this week. In the European session, USD/JPY is trading at 147.67, up 0.25%. The Japanese yen is once again on a downswing, after hugging the key 145 line. The dramatic intervention by Japan’s Ministry of Finance (MoF) in September stemmed the yen’s bleeding, but this […]

US: Retail Sales Remained Flat in September

Retail sales were flat in September month-on-month (m/m), below market expectations for a modest gain of 0.2% m/m. The level of sales was revised 0.4% higher in August (vs. 0.3% reported earlier). Sales at autos & parts dealers declined by 0.4% m/m after growing 2.8% m/m in August. Gasoline station receipts were the major drag […]

Why UK Bond Crisis Spooked Other Central Bankers

The sudden drop in the pound and the emergency intervention by the BOE is largely attributed to the release of Chancellor Kwarteng’s “mini-budget”, at least in the media. That gives the impression that the issue is exclusively a UK problem, derived from fiscal policy. But, that doesn’t explain why other central banks, such as the […]

BoE to Contain Gilt Crash and Save Sterling

GBP/USD slides amid gilts firesale Sterling drifts lower amid a liquidity crunch in the UK’s gilt market. In an attempt to prevent the market’s collapse, the Bank of England has been forced to step in to buy back bonds owned by the country’s major pension funds. The systemic risk is yet to dissipate and investors […]

Sunset Market Commentary

Markets The UK just won’t leave the spotlights these days. It started today with overnight news of Chancellor Kwarteng hurrying to jump on the final flight from Washington DC to London to salvage his unraveling minibudget. Little did he know it was to get sacked. Kwasi Kwarteng out, Jeremy Hunt in. At the time of […]