Bad reaction to China
October 24, 2022
–China GDP 3.9% but CNY hits 7.26, a new low for the yuan. (Have to go back to the start of 2008 for a lower print). JPY currently 149.40; prior to Friday’s intervention, it had reached 150.29 on Thursday, and is nearly back to that level. Chinese stocks were crushed, with SHCOMP down around 2%. Hang Seng currently 15180, down 6% on the day and less than half its level from February 2021 when it was over 31k. Apparently common prosperity means less for everyone.
–Friday featured a much steeper US curve as a Nick Timiraos WSJ article suggested the Fed would downshift hiking plans. The 2y note fell 13.2 bps to 4.47% while 30s rose 12.2 to 4.335%. Ten year inflation breakeven ended at a new high for October at 254.6 bps. In July it hit a low of 229, in August it popped up to 263.5 and then fell to a low of 215.5 by the end of September. In October it has gone straight up, though still below August high. Today’s news includes Mfg and Service PMIs.
–A lot of earnings reports out this week, including: Tuesday: GOOGL, Visa. Wed: MSFT, META. Thurs: AAPL, AMZN. Fri: XOM. ECB meeting Thursday. Interesting CNBC interview with Frank Luntz on Friday warning markets that election results from Nov 8 may not be clear. “I’m scared to death…we’re going to have a problem in this country…”
