political and economic focus
United States
United States
United States PPI grew year-on-year
United States' first unemployment benefits hit a low
euro
ECB "calibrates" emergency bond purchase scale
UK GDP growth in July was lower than expected
Emerging markets and other countries
Russian central bank raises interest rates for the fifth time this year
RBA announced the reduction of bond purchase scale
National sovereign rating dynamics
Fitch raises Taiwan's long-term capital and foreign credit ratings to AA
Interest rate and exchange rate trends in major economies
U.S. Treasury yields closed higher, and the spreads of Treasury bonds and US Treasury bonds in major economies are different
A variety of currencies fell against the backdrop of the strengthening of the US dollar index, and the appreciation of the onshore RMB rose, and the international commodity price trend
crc oil price rose for three consecutive weeks
crcl. gold price fell below the $1,800/oz mark
political and economic focus
US PPI in August grew a record year-on-year
crclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclclcl The U.S. core PPI rose 6.7% year-on-year in August, with the previous value of 6.2%, and expected 6.6%; rose 0.6% month-on-month, with the previous value of 0.9%, and expected 0.6%.
Joint Comment: The significant growth in US PPI data shows that its economy is in a stage of continuous recovery. From the supply side, rising raw material prices caused by supply chain tightness and rising labor costs caused by labor shortage are the main factors driving up the price increase of means of production. From the demand side, economic recovery has led to a rapid increase in corporate demand. The significant increase in PPI will cause companies to shift the pressure on production costs to consumers, becoming the driving force for pushing up CPI again.
The number of people applying for unemployment benefits in the United States hit a low of
On September 9th local time, the U.S. Department of Labor released data showing that the number of people applying for unemployment benefits for the first time in the week ending September 4 fell to 310,000, an estimated 335,000, and the previous value was 340,000. The number of people applying for unemployment benefits for the first time hit the biggest drop since the end of June, falling to a new low since the outbreak of the epidemic.
Joint Comment: The number of first-time unemployment benefits in the United States has declined for two consecutive weeks, mainly because the increase in vaccination rate and economic recovery have increased demand for labor. Although this data is still at a high level compared with before the epidemic, it can still reflect that the US economy is in a stage of continuous recovery. However, the US labor market is still uncertain, and the risk of the epidemic rebound caused by the Delta mutant strain still remains.
European Central Bank "calibrates" emergency bond purchase scale
On September 9th local time, the European Central Bank held a monetary policy meeting and announced the slowdown in the bond purchase speed of the Emergency Anti-epidemic Bond Purchase Program (PEPP) from the next quarter, but maintains the purchase ceiling of 1.85 trillion euros unchanged. In addition, the European Central Bank announced its September interest rate resolution, announcing that the main refinancing rate is 0%, the marginal lending rate is 0.25%, and the deposit mechanism interest rate is -0.5%, continuing to maintain the three key interest rates unchanged, in line with market expectations.
Joint Comment: The continued recovery of the European economy and rising price levels have become important factors affecting the European Central Bank's policies. Affected by multiple factors such as economic growth and supply chain shortages, the inflation level of eurozone countries rose sharply. In August, the eurozone CPI hit a new high in the past decade. High inflation has become an important factor affecting the European Central Bank's decision to "calibrate" emergency bond purchase plan. Europe's policy this time shows that its dovish position has not changed, but the trend remains uncertain after the fourth quarter.
UK GDP growth in July was lower than expected
On September 10th local time, the UK National Bureau of Statistics released data showing that the UK GDP in July increased by 0.1% month-on-month, less than the expected value of 0.6%, and the previous value was 1%. Among them, retail sales fell by 2.5%, and service output fell by 0.3%.
Joint Comment: After the cancellation of the lockdown, the UK economy achieved significant growth in the second quarter. However, the Delta mutant strain caused the epidemic to rebound, and the UK's economic recovery process was hindered.Supply chain tightness and labor shortages are the main reasons for the stagnation of economic growth, with the most significant impact on the construction industry, with construction output falling to its lows since January this year. In addition, the rebound in the epidemic has led to stagnation of growth in the retail industry and a significant decline in the service industry are also important reasons for curbing economic growth.
The Russian Central Bank raised interest rates for the fifth time this year
On September 10th local time, the Russian Central Bank announced that it would raise the benchmark interest rate by 25 basis points to 6.75%. So far, the Russian Central Bank has raised interest rates five times this year, raising the benchmark interest rate by a total of 300 basis points, and the benchmark interest rate level has hit a new high since September 2019. Meanwhile, the Russian Central Bank issued a statement saying that if the situation develops in line with the baseline forecast, the Russian Central Bank will consider the need to further increase the benchmark interest rate at the upcoming policy meeting.
Joint Comment: The Russian Central Bank's interest rate hike is mainly to deal with the stronger-than-expected recovery in domestic inflation. Russia's CPI rose 6.7% year-on-year in August, and the price level, which slowed slightly in July, rose again, far exceeding the central bank's 4.0% inflation target. The rise in inflation is mainly due to the rapid increase in demand side due to the economic recovery, but due to problems such as supply chain shortages and labor shortages caused by entry restrictions, the expansion speed of the supply side is limited and production costs are rising. Russia's high inflation shows that the four consecutive interest rate hikes have not effectively curbed prices. However, the interest rate hike is still slightly lower than the market's expectation of a 50 basis point increase, mainly because although the economy is still in a recovery trend in the third quarter, the growth rate has slowed down and is lower than expected.
The RBA announced that it would reduce the scale of bond purchases
On September 10th local time, the RBA announced that it would reduce the weekly purchase of AUD 5 billion to AUD 4 billion, and said that it would continue at least this scale of bond purchases until mid-February 2022. At the same time, the RBA announced that it would keep the benchmark interest rate unchanged at 0.1% and the 3-year Treasury yield target unchanged at 0.1%.
Joint comment: The RBA’s operation to reduce bond purchases this time was beyond market expectations. From a specific policy perspective, the RBA's balance sheet reduction but extends the bond purchase time, indicating that it remains unchanged in its "dove-like" nature. Judging from economic performance, Australia's economy continued to recover in the second quarter, but the growth rate slowed down significantly. The economic performance is inferior to expectations, which is why the RBA maintains its "dove" nature. Although the vaccination rate in Australia continues to increase, the Delta mutant strain caused the epidemic to rebound, and Australia's economic growth was under pressure again. The RBA's balance sheet shrinkage at this time will cause further economic downward pressure in the third and fourth quarters.
National sovereign rating dynamics
Fitch raises the long-term capital and foreign sovereign credit rating of Taiwan’s long-term capital and foreign currency to “AA”
On September 10, Fitch raised the long-term capital and foreign currency sovereign credit rating of Taiwan’s long-term capital and foreign currency from “AA-” to “AA”, with a rating outlook of “stable”. Fitch believes that Taiwan's exports are strong, with semiconductor and high-tech manufacturing industries supporting economic expansion. Fitch predicts that Taiwan's economic growth rate will rise by 2.9 percentage points to 6.00% in 2021. Fitch pointed out that Taiwan, China, lags behind in vaccination, and only 4% of people completed vaccination due to tight supply. Fitch believes that cross-strait tensions will be a persistent risk in Taiwan.
Interest rates and exchange rate trends in major economies
U.S. Treasury yields closed higher for each term, and the interest rate spreads between Treasury bonds and U.S. Treasury bond yields in various economies are different
U.S. Treasury yields rose across the board this week. The US economy continues to improve, market risks are expected to decline, and the number of people applying for unemployment benefits for the first time in the United States has reached a new low since the outbreak of the epidemic, continued high inflation in the United States and PPI rise beyond expectations, and other factors such as the superposition of multiple factors such as the Federal Reserve's expectations for the year to shrink its balance sheet this year. The average yields of 1-year, 5-year and 10-year U.S. Treasury bonds rose 0.35, 3.40 and 4.10 BP to 0.08%, 0.81% and 1.35% this week, respectively.
The average yield of US bonds in each period this week was different. The average yield spread of US bonds in the 1-year period expanded by 3.11 BP to 2.26%, and the average yield spread of US bonds in the 5-year and 10-year period narrowed by 0.28 and 0.98 and BP to -1.89% and -1.52% respectively compared with last week.The average yield spread of 1-year U.S. bonds narrowed by 0.80 BP to -0.19% this week, while the average yield spread of 5-year and 10-year U.S. bonds widened by 2.17 and 2.70 BP to -0.91% and -1.30% respectively from last week. During the week, the average yield spread of 1-year euro zone bonds and US Treasury bonds narrowed by 0.50 BP to -0.80% from last week; the average yield spread of 5-year and 10-year euro zone bonds and US Treasury bonds narrowed by 1.45 and 2.50 BP to -1.45% and -1.66% from last week, respectively. The average yield spread of 5-year and 10-year UK-U.S. bonds expanded by 2.35 and 2.78 BP to -0.47% and -0.64% respectively from last week.
The dollar index fell against the backdrop of the strengthening of the US dollar index. The value-added onshore RMB rose
This week, due to factors such as rising US Treasury yields and weakening of the euro before the ECB interest rate meeting, the US dollar index fluctuated upward, recording its first close to rise in three weeks. As of Friday, the US dollar index closed at 92.6398, up 0.45% in the week.
This week, the euro, pound and yen were all showing a downward trend against the backdrop of the rise in the US dollar index. Earlier this week, the euro fell due to the ECB interest rate meeting. Although the euro rose slightly after the ECB announced the "calibration" of bond purchase scale, it still failed to reverse the overall decline. The euro closed at 1.1811 against the dollar on Friday, closing down 0.51% during the week. The pound closed at 1.3835 against the US dollar, closing down 0.02% in the week. The US dollar closed at 109.9150 against the yen, and closed up 0.06% in the week.
This week, the offshore RMB exchange rate rose and fell inconsistently. The call between Chinese and US leaders this week boosted market sentiment, and the value-added onshore RMB rose. As of Friday, the US dollar exchange rate against the onshore RMB closed at 6.4408, falling below the 6.45 mark, and closed down 0.22% during the week. Against the backdrop of the upward trend of the US dollar index, the US dollar against the offshore RMB closed at 6.4450, and closed up 0.09% during the week.
International commodity price trend
Crude oil prices have risen for three consecutive weeks
Crude oil prices have risen for the third consecutive week this week, mainly because the impact of hurricane Ida on the US Gulf of Mexico continues and crude oil production has not yet fully recovered. The oil supply shortage has led to a continued decline in U.S. crude oil inventories, which fell by about 30 million barrels to a low since September 2019, according to the U.S. Energy Agency (EIA). In addition, the continued recovery of the US economy has led to a continued increase in demand for crude oil. As of the close of Friday, the price of NYMEX crude oil closed at US$69.71 per barrel, with a cumulative increase of 1.20% during the week; the price of ICE Brent oil closed at US$72.95 per barrel, with a cumulative increase of 0.91% during the week.
Gold price fell below the $1,800/oz mark
This week, the U.S. Treasury yield and the US dollar index both rose, which put a certain pressure on the gold price. The gold price fell below the $1,800/oz mark during the week. As of Friday, COMEX gold price closed at $1,788.20 per ounce, down 2.05% during the week.
This article is derived from United Credit
