China interbank bond market

Dear Reader , The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of. In a case of how cheer for the economy may not be so for markets, investors in US stocks fretted over excellent jobs data. US businesses added 5,28,000 jobs in July, beating most estimates by an embarrassing margin. US 2-year treasuries rose after the report, as the market priced in a more certain likelihood of another 75-basis point rate hike by the US Fed. But the S&P 500 slipped, as investors pondered over what too strong an economy could mean for interest rates. Those fears did not carry over to India, however, with the stock market rising by a strong 0.8 percent at 1.15pm. The RBI’s 50 basis point hike in the repo rate last week and its determination to stay in ‘withdrawal of accommodation’ mode is … [Read more...] about Moneycontrol Pro Panorama | Are US and Indian markets decoupling?

- A + A (Aug 9): China’s top auditor is conducting a review of the US$3 trillion trust industry, paving the way for a potential overhaul of a key shadow banking sector where losses on property loans are mounting. In an unscheduled move, the National Audit Office — which previously led an examination of bank exposures to Jack Ma’s Ant Group Co — has for the past month been inspecting the books of at least 20 trust firms, including the top five, to gauge the risks they pose to financial stability, according to people familiar with the matter. The firms are being asked to report on their risky loans to developers and any plans to dispose of them, the people said, asking not to be named as they’re not authorised to speak publicly. The audit office is expected to submit its conclusions to policy makers in Beijing, who may decide on the future reforms of the sector, the people said. While it is unclear what regulatory action the scrutiny will spur, the move illustrates … [Read more...] about China orders surprise audit of US$3 trillion trust industry

- A + A WASHINGTON (Aug 9): President Joe Biden on Tuesday will sign a bill to provide US$52.7 billion in subsidies for US semiconductor production and research and to boost efforts to make the United States more competitive with China's science and technology efforts. The White House is touting investments that chip companies are making even though it remains unclear when the US Commerce Department will write rules for reviewing grant awards and how long it will take to underwrite projects. The chief executives of Micron, Intel, Lockheed Martin, HP and Advanced Micro Devices will attend the signing, set for 10am EDT, as will cabinet officials and auto industry and union leaders, including United Auto Workers President Ray Curry, the White House said. Also attending will be governors of Pennsylvania and Illinois, the mayors of Detroit, Cleveland and Salt Lake City, and lawmakers. The White House said the bill's passage was spurring new chip investments. It noted … [Read more...] about Biden to sign bill to boost US chips, compete with China

WASHINGTON- President Joe Biden on Tuesday signed a landmark bill to provide $52.7 billion in subsidies for U.S. semiconductor production and research and to boost efforts to make the United States more competitive with China’s science and technology efforts. “The future is going to be made in America,” Biden said, calling the measure “a once-in-a-generation investment in America itself.” Biden touted investments that chip companies are making even though it remains unclear when the U.S. Commerce Department will write rules for reviewing grant awards and how long it will take to underwrite projects. Some Republicans joined Biden on the White House lawn to attend the signing of the chips bill that was years in the making in Congress. The chief executives of Micron, Intel, Lockheed Martin, HP and Advanced Micro Devices attended the signing as did governors of Pennsylvania and Illinois, the mayors of Detroit, Cleveland and Salt Lake City, and lawmakers. The White House said the … [Read more...] about Biden signs bill to boost U.S. chips, compete with China

Representative image (Source: Reuters) PRO Only Highlights - Quarterly performance largely backed by improved realisations - Medium-term triggers China plus and protectionist measures for tyre industry - Valuations not inexpensive; but improved medium-term outlook Crude oil prices have come down significantly in the last one month while refining margins have crashed from all-time highs to long-term averages. Brent crude, it may be noted, had remained above $100 for 159 days. However, the recent price crash does not offer definite signals about its future course. (image) No significant supply increase post US President visit In our last note, we talked about the expectations of higher oil supply following the US President's visit to Saudi Arabia. But it... … [Read more...] about Oil: Price fall in a tight market makes it a tricky affair

RBI Governor Shaktikanta Das. (File photo) Dear Reader , A day before the monetary policy announcement, the yield on the 10-year bond fell sharply on a media report that the MPC would signal a pause after Friday’s hike. Thankfully, the MPC held firm, refusing to oblige the bond markets. Not only did it increase the repo rate by 50 basis points, but also the MPC signalled more rate hikes in future by refusing to tone down its ‘withdrawal of accommodation’ stance. Much is being made of the fact that the policy rate is now at the pre-pandemic level. At 5.4 percent, the repo rate is now back to where it was in September 2019. But that is n​o big deal. GDP growth was a measly 3.7 percent in 2019-20 compared to RBI’s projection of 7.2 percent in 2022-23; retail inflation was a much lower 4.8 percent in 2019-20, compared to a projected 6.7 percent for 2022-23; the current account deficit was a comfortable 0.9 percent of GDP in 2019-20 as against projections of around 3 percent … [Read more...] about Moneycontrol Pro Weekender | Shaktikanta Das refuses to pivot

Representative image Shares slipped and the dollar hung off recent highs on Tuesday as investors eyed U.S. inflation data due a day later that will likely yield clues to any further aggressive Federal Reserve rate hikes. The stakes are high for the July U.S. consumer prices report on Wednesday after an unexpectedly strong U.S. jobs data last week boosted expectations of a sharp interest rate increase to tackle soaring inflation. The broader Euro STOXX 600 fell 0.6%, after logging its best session in nearly two weeks on Monday, with German stocks down 0.7%. Miners and autos, among top gainers a day earlier, led declines on Tuesday. Wall Street futures pointed to slim gains. "The focus is on tomorrow's U.S. inflation numbers and whether or not they are likely to show any indication of a softening of inflationary pressures," said Michael Hewson, chief market analyst at CMC Markets. Close "Are we near the peak, and will tomorrow's CPI numbers reflect that?" … [Read more...] about Stocks stumble as caution reigns ahead of U.S. inflation data

Representative image Impostor syndrome seems to be more common than actually thought, though at a collective level. People may often feel that the groups they are affiliated with may be underperforming in comparison to other groups. Although this self-critical approach may work in certain cases, it may also overlook the positives, and decrease the morale of those affiliated with the group. Many in India seem to have a collective/national-level impostor syndrome. While the Indian economy is much better placed than its peers in the emerging markets, and other economies, the government is being criticised on the economic front. The criticism comes when the fundamentals of the Indian economy are robust, despite the exogenous shocks caused by the COVID-19 pandemic, supply chain disruptions, monetary policy tightening by the US Federal Reserve, the Ukraine-Russia conflict, and inflated crude oil prices. India's macroeconomic health remains robust despite external pressures, and ongoing … [Read more...] about Bibek Debroy writes: India’s economy is better placed than its peers, other economies around the world

- A + A (Aug 9): President Joe Biden signed into law a broad competition Bill on Tuesday that includes about US$52 billion to boost domestic semiconductor research and development, calling it a “once-in-a-generation investment in America itself”. “We need to make these chips here in America to bring down everyday costs and create jobs,” said Biden at a signing ceremony for the CHIPS and Science Act on the White House South Lawn, joined by executives from US semiconductor firms and congressional leaders. Biden said he had visited the US facility where Javelin missiles were made and said the Bill would make the nation less reliant on other countries to provide the advanced chips needed for those weapons systems, as well as other products. “Unfortunately, we produce 0% of these advanced chips and China is trying to move way ahead of us to manufacture these sophisticated chips as well,” said Biden. “It’s no wonder the Chinese Communist Party actively lobbied US … [Read more...] about Biden signs chips bill, unleashing subsidies for US production

Representative image The Reserve Bank of India announced measures to ease forex inflows. This explainer helps us understand the measures and objectives behind them. What are forex inflows and why are they needed? One of the major factors of a country’s growth is higher savings. Savings are channelised into investments, which help drive the growth of an economy. If the domestic savings rate is low or the investment rate is higher than the savings rate, foreign exchange savings can be used to bridge the gap. Foreign exchange savings are nothing but net inflows of foreign capital. The Indian economy was liberalised in 1991 and efforts were made to attract forex inflows. There are various categories of forex such as Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI), NRI deposits, and External Commercial Borrowings (ECB). The government and the Reserve Bank of India welcome equity flows such as FDI and FPI, but are cautious about debt inflows because heavy … [Read more...] about MC Explains | Will steps to liberalise forex inflows help the rupee?