Ian Reynolds
I agree, it's a cheap shot, but I couldn't resist it.
Breaking: EU diplomats agree to use frozen Russian assets to aid Ukraine [Axios]
Breaking: Putin orders tactical nuclear weapons drills in response to Western ‘threats’ [CNN]
Alert: BRICS: Serbia may turn its back on Europe and turn to China[CryptoDnes]
As Liz Truss knows, lose the trust and confidence of financial markets and you lose your job. In 44 days as UK Prime Minister, she managed to demolish the confidence in capital markets, embarrass the Bank of England, smash the Gilts market, depreciate Sterling by 13% and cost pensioners billions of pounds. The mind boggles at what she could have achieved in a full term.
But is her ghost stalking the capital markets again ?
The foreign exchange (biggest) market is testing the resolve of Japanese authorities and, initially unwittingly, testing the resolve of the US Treasury and Federal Reserve. The biggest and 4th biggest global economies. And the 2 biggest debtor nations in terms of Debt-to -GDP.
And the stakes are huge...
Markets testing Bank of Japan and now the FED ?
USD / YEN keeps coming back to test the mettle of the Bank of Japan or technically speaking the Finance Ministry. The 2 rounds of intervention caused Treasury Secretary Yellen to request publicly that communication with US officials is essential.
But what's it got to do with her ?
Obviously she doesn't want Japan to sell trillion of dollars of US Treasuries in defence of the Yen. Surely Comrade Powell at the FED would be the one to step in here. He can help with swap lines and even participate in concerted central bank intervention. But will they ? Even if Yellen asks them to ? In an election year ?
Aside from the price of USD / YEN and how the Treasury funds itself, the cost of both parties losing credibility with capital markets would be immense. And currencies crises would spread across the world.
As investors watch from the sidelines, there is growing sense of unease.
Maybe it's the ghost of Liz Truss !
USD / YEN Daily
Watch the market push this up further to test the Bank of Japan's mettle.
BOJ’s Ueda Ramps Up Yen Warnings While Traders Keep Selling [Bloomberg]
Canada
Bank of Canada warned the public of a possible sharp correction in asset prices & systemic risk to the banking system.
United Kingdom
Old Lady of Threadneedle Street holds rates steady
US Economy
Bezos, Zuckerberg lead magnificent seven insider stock sales [AFR]
US Weekly Jobless Claims
Fannie and Freddie into the fray
The proposed equity mortgage reforms could potentially unleash liquidity into a frozen property market.
Fannie Mae & Freddie Mac are US Govt lending departments which may be allowed into secondary market mortgage lending to prop up a market where Basle 3 stops banks lending.
This could be a massive stimulus which may not be a good thing. Who wants public lending for housing ?
Expert analysis from Melody Wright and Adam Taggart on the ThoughtfulMoney show [YouTube}
The mortgage reform that could unleash the next big US stimulus [FT]
Real Estate
Contagion spreads to apartments in the US.
A Third of Office Mortgages Packed Into Bonds Are at Risk of Default [Bloomberg]
Gold
In The Background
>>China
Xi Jinping’s vast gold war chest could let him take Taiwan without a fight [Telegraph]
Deflation seems to have been averted for now, but PPI is looking ominous and the trade numbers suggest that the rest of the world economy is not going to come and save China's economy.
China CPI, PPI April 2024
China Trade Balance April 2024
>>Cryptocurrencies
US House Advances Bill To Allow Financial Firms To Hold Bitcoin [Watcher.Guru]
>>Europe
Germany Industrial Production March 2024
EU PPI March 2024
>>Australia
Ratings warning over Victoria’s $188b debt [AFR]
The budget next week is getting a lot of coverage. The economy is slipping but prices paid are not. The new tax cuts and HECS debt cancellations will be stimulatory and Chalmers will be looking for voter buy-in.
RBA Holds
A rate rise was closer than you think [AFR]
Australia Retail Sales April 2024
What's Next
It's CPI week !
BRICS meetings in Moscow
Putin visits China
Saudi Arabia's Crown Prince Mohammed bin Salman goes to Japan the week after
![This Week's Important Economic Indicators [London time]](https://vip.suberia.capital/hs-fs/hubfs/indicators-May-10-2024-07-39-47-1042-AM.jpg?width=660&height=478&name=indicators-May-10-2024-07-39-47-1042-AM.jpg)
