JASPER’S MARKET SQUAWK 15-08-2023

<h2>China Housing Situation an Overhang for Markets</h2>
<p>Asian indices continued to trade down over the situation with property developers while US stocks advanced. Treasury yields drifted higher, helping push the dollar index to highs not seen in over a month.</p>
<p><img decoding="async" loading="lazy" class="alignnone wp-image-25003 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-1508.png" alt="" width="1752" height="834" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-1508.png 1752w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-1508-300×143.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-1508-1024×487.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-1508-768×366.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/08/Market-1508-1536×731.png 1536w" sizes="(max-width: 1752px) 100vw, 1752px" /></p>
<p><strong>Chart: GOLD</strong></p>
<h2>Key Factors for Today</h2>
<ul>
<li>China’s Housing Crisis Weighs on Markets</li>
<li>US Inflation Easing But Still Above Current Rate</li>
<li>Japan GDP Beats Expectations But Domestic Demand Lags</li>
<li>PBOC Eases Policy to Reassure Markets</li>
<li>RBA Minutes Confirm Inflation Reasonably Lower</li>
</ul>
<h2>NY Fed Survey Sees Inflation Easing But Still Above Current Rate</h2>
<p>The NY Fed’s Survey of Consumer Expectations sees inflation at 3.5% one year from now, down from the 3.8% in the prior survey but higher than the current rate. It’s the lowest expectation since April of 2021. The data came in line with previous surveys by the University of Michigan and the Cleveland Fed, showing that expectations for inflation over the next twelve months have fallen but remain above the current rate, supporting the higher-for-longer narrative despite markets expecting the Fed to cut in early 2024. The rise in the dollar saw gold falling to $1900/oz once again, with further declines opening up $189/oz. Conversely, a bounce at the round support could offer respite towards $1915/oz but unlikely.</p>
<h2>Japan GDP Upbeat But Domestic Demand Lacklustre</h2>
<p>Preliminary Q2 GDP growth in Japan was reported at 1.5%, nearly doubling the estimated 0.8%, with the annual rate to 6.0% over the 2.9% forecast. Q1 GDP was also revised to 0.9% from 0.7%. But lacklustre domestic consumption demand implies that the BOJ might stick to its ultra-easing policy despite economic growth and higher inflation. USD/JPY registered its 6th day of gains to November highs, eying 146.39 while trading above 145. 144.20 is expected support if the situation turns around.</p>
<h2>PBOC Eases Policy in a Surprising Move</h2>
<p>China Retail sales rose at the slowest pace since the end of last year at 2.5% compared to 4.0% expected. Chinese industrial production also disappointed, growing at 3.7% annual in July, compared to the 4.3% expected. JPMorgan warned that missed payments from Chinese trust firms may trigger a vicious cycle for property developers in China. The Chinese Central Bank stepped in to help reassure the markets after rumours circulated on Monday that it would take action. The PBOC cut the MLF by 15 bps and the RRR by 10 bps. Additionally, it injected an additional CNY401B into the MLF facility, which is the equivalent of a rate cut with quantitative easing. China’s Yuan hit November highs at 7.3, with the door to October’s 7.37 but also 7.26 open.</p>
<h2>RBA Minutes Shows Confidence in Slowing Inflation</h2>
<p>The RBA minutes showed that the options of a quarter-point hike and a hold were discussed, with the latter option winning out as members reasoned that inflation has come down notably. They expected the economy to grow slowly over the next few months. However, members conceded that future rate hikes might still be required. AUD/USD fell to a November low of $0.6450 before recoiling up but still closed in the red. Price action appears positive early Tuesday, with bulls attempting to reclaim the 65-cent barrier.</p>
<h2>On The Docket</h2>
<ul>
<li>UK Jobs</li>
<li>EA ZEW Economic Sentiment</li>
<li>German ZEW Economic Sentiment</li>
<li>Canada Inflation Rate</li>
<li>US Retail Sales</li>
<li>US Trade Balance</li>
<li>NY Empire State Manufacturing</li>
<li>NAHB Housing Market</li>
<li>Fed Kashkari Speech</li>
<li>API Crude Oil Stock Change</li>
</ul>
<h2>FX 1-Day Relative Performance (USD)</h2>
<ul>
<li>Aussie and Kiwi 0.24% and 0.14% up</li>
<li>Euro and Pound both up by mere 0.02%</li>
<li>Yen up by 0.05%, Swissy by 0.03% only</li>
<li>Loonie 0.07% higher</li>
<li>Gold and Silver down by 0.38% and 0.19%</li>
<li>Crude 0.04% lower while Brent up by 0.02%</li>
<li>Natural gas 1.75% higher</li>
</ul>
<p>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/jaspers-market-squawk-15-08-2023-24999/">JASPER’S MARKET SQUAWK 15-08-2023</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>