English

Amid uncertainty over the timing of the Fed’s rate cut, the People’s Bank of China is expected to keep key policy rates unchanged when it rolls over maturing medium-term loans on Friday.Market observers generally believe that Beijing will continue to prioritize the stability of the yuan, despite widespread agreement that the struggling economy needs more stimulus.Cutting interest rates before the Fed or other major central banks take action would widen yield differentials and could put more pressure on the yuan. Despite the central bank’s continued efforts to support the yuan, the yuan has depreciated 1.3% against the dollar so far this year.”We maintain our view that the People’s Bank of China will not cut rates ahead of the Fed,” said DBS economist Samuel Tse.”After all, the authorities aim to stabilize the exchange rate to prevent further capital outflows. Stabilizing economic data also leaves room for delaying a decision to cut interest rates.”The Fed is widely expected to cut interest rates this year if inflation cools, with markets currently pricing in a 65% chance of a rate cut in June, according to LSEG’s Rate Probability app, although that’s down from 71% earlier this week. dropped. The chance of a rate cut in July is about 83%.Traders and analysts said a rate cut or series of rate cuts by the Federal Reserve would give China’s central bank room to maneuver to lower borrowing costs to support economic growth.A bond fund manager in Beijing said that “China’s policy interest rate adjustment may have to wait until the timing of the U.S. interest rate cut is clear.” He expects the central bank to fully roll over maturing MLF loans and even provide some new funds to the market. Financial system on Friday.However, Pan Gongsheng, the governor of the People’s Bank of China, said last week that the bank would keep the yuan basically stable and sent a dovish message to the market, saying China “has abundant monetary policy tools.””We expect China to introduce more loose monetary policies to support economic growth,” Barclays economists said in a note.”We expect policy rates to be cut by 10 basis points in both the second quarter and third quarter, and expect the bank reserve ratio (RRR) to be cut by 25-50 basis points in the second quarter and by another 25-50 basis points in the third quarter.”

  Britain’s financial regulator on Monday approved the launch of cryptocurrency-backed exchange-traded notes for professional investors, becoming the latest regulator to allow digital asset products while trying to protect retail investors.The Financial Conduct Authority (FCA) said in a statement that such products – bonds issued by financial institutions that track the performance of the underlying assets – will only be available to investment firms and credit institutions authorized to operate in financial markets.The FCA said the ban on cryptocurrency exchange-traded notes (ETNs) and derivatives for retail investors will remain in place, calling it “unsuitable” because “they can cause harm.”The London Stock Exchange said in a separate statement on Monday that it will accept applications for admission to Bitcoin and Ethereum ETNs starting in the second quarter of this year.In recent months, the U.S. Securities and Exchange Commission (SEC) has approved a Bitcoin spot exchange-traded fund, while calling the token a “speculative, volatile asset and used for illegal activities” and urging investors to exercise caution. Crypto markets have surged in recent months. .Bitcoin hit an all-time high above $70,600 on Monday, driven by an influx of cash into Bitcoin ETFs and expectations that the Federal Reserve will cut interest rates soon.The FCA said that with “deeper insights and data from longer-term trading history,” professional investors can better determine whether cryptocurrency ETNs meet their risk appetite. The exchange said it must ensure orderly trading and protect investors.However, the FCA reiterated warnings from recent years, saying cryptocurrencies are “highly risky and largely unregulated” and that investors could “lose all their money.”Jake Green, global head of financial regulation at law firm Ashurst, said the FCA’s stance on cryptocurrencies and retail investors was in a “state of flux”.He said the regulator “clearly doesn’t want to get close” to the idea that “retail investors can buy cryptocurrencies in the form of FCA-regulated financial instruments”.

 U.S. job openings fell slightly in January, while hiring also declined as labor market conditions continued to gradually ease. Job openings, a measure of labor demand, fell by 26,000 to 8.863 million on the last day of January, the U.S. Department of Labor’s Bureau of Labor Statistics said Wednesday in its monthly Job Openings and Labor Turnover Survey (JOLTS) report.December’s data was revised downward to show 8.889 million job openings, instead of the 9.026 million previously reported. Economists predict there will be 8.9 million job openings in January. In March 2022, job vacancies peaked at a record 12 million. Recruitment fell by 100,000 jobs to 5,687,000. The number of resignations in January was 3.385 million, a decrease of 54,000.In prepared remarks to lawmakers on Wednesday, Federal Reserve Chairman Jerome Powell said the Fed expected to begin cutting interest rates this year, but warned that there was uncertainty about the economic outlook and that continued progress toward the 2% inflation target was unlikely. uncertain. Since March 2022, the Federal Reserve has raised its policy interest rate by 525 basis points to the current range of 5.25%-5.50%. The Labor Department is expected to report Friday that nonfarm payrolls rose by 200,000 in February, according to a survey of economists. The economy added 353,000 jobs in January. Job growth has slowed from the strong pace in 2022, but wage gains are well above the roughly 100,000 jobs needed each month to keep up with growth in the working-age population. The unemployment rate is expected to remain unchanged at 3.7%, with annual wage growth slowing to 4.4% from 4.5% in January.

According to state media reports, China’s cabinet has approved a plan to promote the upgrading of large-scale equipment and sales of consumer goods. This plan is part of a broader effort by China to stimulate its economy, which has been experiencing weak recovery following the COVID-19 pandemic.The government intends to launch a new initiative to encourage the replacement of old consumer goods with new ones, with the aim of increasing the proportion of advanced production capacity. The cabinet meeting, chaired by Premier Li Qiang, emphasized the need to promptly improve and implement the plan to ensure the continuous introduction of high-quality and durable consumer goods into the lives of residents.During a previous similar scheme between 2009 and 2011, the Chinese government provided subsidies of around 40 billion yuan ($5.6 billion) to buyers of home appliances. Analysts at Societe Generale estimate that to match the significance of the previous round of subsidies, subsidies in 2024 would need to reach at least 60 billion yuan, considering the larger size of China’s GDP.China’s parliament is expected to unveil moderate stimulus plans during its annual meeting, which begins on Tuesday. However, there may be some disappointment among those expecting a detailed roadmap of bold measures to address the country’s deep structural imbalances.

India’s fiscal deficit for the period of April to January in the 2023/24 financial year stood at 11.03 trillion rupees ($133.1 billion), which is approximately 63.6% of the estimated deficit for the entire year, according to government data released on Thursday. During the same period, net tax revenues reached 18.80 trillion rupees, which accounts for around 81% of the yearly estimate, showing an increase from 16.89 trillion rupees in the corresponding period of the previous year. Total expenditure during this period amounted to 33.55 trillion rupees, or roughly 75% of the annual target, compared to 31.68 trillion rupees in the same period last year. Additionally, the government’s capital expenditure for the first ten months of the financial year reached 7.21 trillion rupees, or 76% of the annual target, surpassing the 5.70 trillion rupees spent in the same period the previous year.To address the fiscal deficit, India has revised its target for the current financial year, ending on March 31, to 5.8% of the country’s gross domestic product (GDP), reducing it by 10 basis points. Furthermore, the government aims to bring down the deficit to 5.1% in the following financial year.

 China’s new home prices slowed their month-on-month declines in January with the biggest cities seeing some stabilisation, but the nationwide downward trend persisted despite Beijing’s efforts to revive demand.New home prices fell 0.3% month-on-month in January after dipping 0.4% in December, according to  calculations based on National Bureau of Statistics (NBS) data on Friday.China has been ramping up measures to arrest a property downturn, including ordering state banks to boost lending to residential projects under a “whitelist” mechanism. More big cities including Shanghai have also eased purchase curbs to lure homebuyers.Last month, home prices in tier-one cities fell 0.3% on month, smaller than their 0.4% decline in December, partly due to additional support measures including a reduction in down-payments.Among 70 cities surveyed by NBS, Shanghai saw the biggest month-on-month increase with a rise of 0.4%, while the remaining three tier-one cities – Beijing, Guangzhou and Shenzhen – posted smaller home prices declines than most tier-two and tier-three centres.The number of cities that saw monthly price falls in January also decreased, but the overall market remained on a clear downtrend with buyer sentiment still very weak.From a year earlier, home prices fell 0.7%, marking the sharpest drop in 10 months. That was despite a low statistical base in January 2023 when prices dropped 1.5% year-on-year due to COVID-19 disruptions.Nie Wen, an economist at Hwabao Trust, said home price declines could persist.”It may take more than a year for the entire property market to fully recover and rebound,” Nie said.Central bank data released on Feb. 9 showed household loans, mostly mortgages, climbed to 980.1 billion yuan in January, far more than 222.1 billion yuan in December.However, Nie said people are not using such loans to buy homes, but rather for personal consumption.Residents will invest in the medium to long term, including buying property, only when their income expectations improve, he added.The property market has struggled to stabilise having languished since 2021 due to a series of defaults among overleveraged developers.As a result, policymakers have continued to roll out measures to boost market confidence.The country’s central bank on Tuesday announced its biggest ever reduction in the benchmark mortgage rate, although analysts believe its impact on home price will be limited given existing mortgage holders will not benefit until next year.”It will take some time for homebuyers’ incomes and confidence, and overall demand to recover in the property sector, which is still in the process of gradually bottoming out,” said Zhang Dawei, an analyst at property agency Centaline.