Cedric Chehab’s Post

*APAC Market Monitor*– In APAC, governments and firms are evaluating their level of exposure to a Trump presidency. Moreover, currency and financial markets have been experiencing some volatility due to the election and the Fed’s recent hawkish comments. APAC currencies have been depreciating under these circumstances, and they will face further downside risks in 2025. Other developments in the region include: 👉 The Chinese government released a much-anticipated stimulus package, which is likely to disappoint businesses in the market. 👉 Meanwhile, Japan wrapped up its tumultuous leadership race and announced a fresh stimulus package as well. 👉 Finally, Q3 GDP figures were released for several key markets in the region, including South Korea, Malaysia, and Indonesia. Subscribers can access the full APAC Market Monitor for December here 👇 Or follow the same link to read a summary and then sign up for a free trial to enjoy full access to our market-leading insights, research and data: https://lnkd.in/eyc73usF #APAC #APACmarketmonitor #APACcurrencies #APACTrump #investmentstrategies #planning2025

Most recently, we wrote on #China, #Risk, durable #Goods and the #Currency war. Read ⬇️ 🌏 China's Economic Confidence Boost As China approaches its 75th anniversary, authorities are working hard to revitalize confidence. The People's Bank of China (PBOC) has announced a comprehensive package addressing policy rates, liquidity, the property sector, and the stock market, with unexpected guidance on future policies. However, to truly uplift domestic confidence, further fiscal spending is necessary, as hinted at in this week's Politburo meeting. Despite aiming for an official growth target of "around 5%" for this year, downside risks remain, while 2025 could see an upside to our forecast of +4.3%. 📊 Quarterly Country and Sector Risk Changes: Normalization Complete  We've upgraded 14 countries, reflecting the ongoing recovery in economic outlooks. Yet, the journey ahead is uneven due to protectionist policies and geopolitical tensions. In sectoral analysis, nine sectors have improved while five have declined. Downgrades were seen across all regions, particularly in the automotive sector in Germany and Switzerland, and the retail sector in China due to weak consumer outlooks. 📈 Durable Goods: Poised for a Rebound in 2025  Following a slowdown in 2022 and 2023, durable goods sales are projected to remain sluggish in 2024 but are set for a robust recovery in 2025. Key factors include decreasing financing costs, a shift from expensive services to goods, replacement cycles from 2021 purchases, technological innovation, and easing supply-chain disruptions. 💱 The Great Loosening Cycle: Balancing FX, Inflation, and Growth  Central banks are navigating a complex landscape. The Fed's significant cut is a positive move for the global FX market, yet challenges remain. We categorize countries into four clusters based on their priorities: Emerging Europe, Chile, and Colombia: Focus on boosting growth while managing inflation. Advanced economies in Europe, China, and Thailand: Growth with fewer inflation concerns. Most of Asia, Latin America, South Africa, and Norway: Slower easing due to weak exchange rates and financial stability. Large African economies, Türkiye, and Argentina: Restoring exchange rate confidence and reducing inflation. Switzerland and Japan may need interventions to manage appreciation pressures. #Ludonomics #AllianzTrade #Allianz https://lnkd.in/eby-DUBQ

This week's Global Credit Bullets ➠ https://lnkd.in/eQKpsQVs : Markets are turning weaker as recession fears mount. Weak manufacturing data in Europe, rising unemployment rate in US, and the absence of fiscal stimulus in China are turning into broad equity weakness. At its July meeting, the Federal Reserve has guided markets for a beginning of its cutting cycle in September. The Bank of Japan surprised markets by hiking interest rates 15bp to 0.25% at the July meeting.

🌏 In our Q2 Asia Corporates Newsletter, our Asia Pacific research team delves into the macro backdrop currently setting the scene for corporates in the region. 💲 The Federal Reserve is looking set for a delayed, potentially more drawn out and eventually shallower interest rate cycle than in the past. This position puts central banks in Asia in a bind, as higher for longer core rates and a stronger US dollar make it harder for them to respond to their domestic imperatives of growth and inflation. 🛢️ Upside risks to oil are again potentially upsetting the balance of both trade and inflation in the region. Also, while elections in Asia are mostly done, the political calendar is set to heat up in the second half of the year in the lead-up to the US presidential election. This all points to the next few months being likely challenging in Asia. 🚗 However, there are also key opportunities like the Goldilocks-ish macro environment in India, investments being made in ASEAN to move up the semiconductor value chain and Thailand’s efforts to become a regional export hub for Electric Vehicles. For more insights, registered clients can read our full Q2 Asia Corporate Newsletter here: https://lnkd.in/emn6xKCs #dbresearch #electricvehicles #Asia #AsiaPacific Deutsche Bank Sameer Goel Tim Baker Michael Hsueh Liam Fitzpatrick Perry Kojodjojo Bryant Xu Joey Chung

Christiaan Tuntono, Senior Economist APAC, joined Bloomberg’s The China Show this morning to share his insights on the Federal Reserve (Fed), Bank of Japan (BoJ) and Chinese economy. On the Fed, Christiaan thinks the current market expectation of seeing 3 interest rate cuts this year and more in 2025, with potentially some being 50 basis point cuts, could be an overreaction. He believes US inflation shall continue to moderate due to rising statistical base and falling CPI Shelter inflation, but may stay supported by resilient growth and service inflation under a soft-landing scenario. Christiaan cautioned that recent market panic about an outright recession ahead and extreme Fed easing are probably premature at this point. Shifting to the BoJ, Christiaan noted that the BoJ has been gradually laying the groundwork for policy normalisation years ahead, widening and ultimately dismantling the yield curve control measure and exiting from the negative interest rate policy. The modest 15bp rate hike this week should be seen as a step in this gradual normalisation process. He believes Japan's structural challenges requires the BoJ to maintain an accommodative, though less ultra-loose, monetary policy stance to support growth. On the Chinese economy, Christiaan commented that the weakening export momentum lately is in-line with the global slowdown, evidenced by the disappointing US ISM print overnight and moderation in the export data of other Asian economies. China is undergoing a transition, moving away from its past leverage-fueled growth model to a new growth model driven by new productive forces, urbanisation and fiscal reform. Stabilising the property sector will be important, as the ongoing home price correction has weakened consumer confidence and domestic demand, pressuring China’s consumer and producer prices in the meantime. #Fed #BOJ #ChineseEconomy #China

✔𝗠𝗶𝘅𝗲𝗱 𝗜𝗻𝗳𝗹𝗮𝘁𝗶𝗼𝗻 𝗗𝗮𝘁𝗮 𝗳𝗿𝗼𝗺 𝗔𝘀𝗶𝗮-𝗣𝗮𝗰𝗶𝗳𝗶𝗰 𝗠𝗮𝗿𝗸𝗲𝘁𝘀 𝗦𝗽𝗮𝗿𝗸𝘀 𝗠𝗮𝗿𝗸𝗲𝘁 𝗨𝗻𝗰𝗲𝗿𝘁𝗮𝗶𝗻𝘁𝘆 Inflation data from China and Japan revealed mixed results, contributing to uncertainty in Asia-Pacific markets as investors await the U.S. Federal Reserve's decision. For more information 📕Read - https://lnkd.in/d_xrj8pC And get insights #InflationData #AsiaPacificMarkets #MarketUncertainty #EconomicNews #GlobalEconomy

In CNBC Asia Squawk Box this morning, Christiaan Tuntono, our Senior Economist Asia Pacific, shared his views on the outlook for Asia economies. He noted that the future policy rate moves in Asia would be very much determined by the policy rate trajectory of the Fed. When the Fed starts progressing into a policy rate cut cycle, the easing of global monetary condition will be a tailwind for the macro condition in Asia. The fact that Asia harbours less resilient price pressures allows disinflation to proceed, prompting higher real interest rates and raising the prospect for nominal policy rate cuts in Asia this year. Subject to when the Fed starts cutting, he thinks Bank Indonesia and the Reserve Bank of India may also commence their policy rate easing moves in the late second quarter or third quarter of 2024, followed by the Bangko Sentral ng Pilipinas and the Bank of Korea in 2H24. Besides, he observed that both Korean and Taiwanese tech-related data, such as export orders, merchandise exports, and inventories, have shown signs of stabilization. This suggests that the global semiconductor cycle is potentially in the process of bottoming out. Hence, he turned more constructive on the outlook of the two tech-heavy economies in East Asia, anticipating their external economies to recover through 2024. #AsianEconomies #AsianCentralBanks #MonetaryPolicy #RateCuts

🌏 It’s an extraordinary time for Asian economies with risks from the upcoming US election in particular driving a fork in the road on the outlook for the region into year-end. Our Global Head of Emerging Markets and Asia Pacific Research, Sameer Goel and his team take a closer look at the binary nature of these risks in their latest quarterly Asia Corporate Newsletter. On the one hand, the Fed is in a good position to manage an almost perfect landing, which should give Asia room to ‘normalise’ its policy settings. And with China’s economic stimulus potentially the largest ever in nominal terms, the team feels comfortable that the left tail risk for the economy should be better contained in the near term. To the extent that the latest round of stimulus in China also actively targets a recovery in consumption, the rest of Asia should also benefit. 📶 On the other hand, the outcome of the US election could bear heavily on the relationship between US and China, and by extension, other parts of Asia, with the use of tariffs potentially being a key differentiating factor between alternative scenarios. The newsletter talks about potential hedging strategies in the current environment for corporates with underlying Asia FX exposure. It also suggests that this may be an opportune time for Asian corporates to issue USD-denominated bonds. ➡️ Deutsche Bank clients can read the full report here: http://deu.ba/6044fuN3E #dbresearch #DeutscheBank #AsiaPacific

China clouds darken market mood.(Part 01) May 20 (Reuters) - A look at the day ahead in Asian markets. Broadly speaking, the global backdrop for Asian markets is still bright, with investors confident that the Fed will soon cut U.S. interest rates keeping the dollar, bond yields and volatility in check, and boosting risk assets. But there's a cloud that shows no sign of lifting: China. If anything, it's getting darker. The economic "data dump" from Beijing on Friday showed that China's recovery is sputtering - investment growth slowed, retail sales expanded at the slowest pace since late 2022, and new home prices fell at the fastest rate in nine years. Most alarming, the property sector bust is deepening. Granted, Chinese and Hong Kong shares jumped on Friday after Beijing unveiled a series of historic steps to stabilize the sector, but will the bounce last? Even though the central bank said it is facilitating 1 trillion yuan in extra funding and easing mortgage rules, and local governments will buy some apartments, deep-rooted fundamentals of huge over-supply and weak demand remain. Renewed concern over China's growth raises the question of how Beijing will finance its fiscal support measures in the long term. China is sitting on more than $3 trillion of FX reserves. Is now the time for China to dip into that rainy day fund to prevent the property sector bust from bringing down the wider economy? It's unlikely, and Beijing may well default to ramping up exports as the preferred path to recovery. But that would not be welcomed by the United States, which last week imposed extra tariffs on $18 billion of imports from China. These tariffs and the hardening battle lines between the West and China on trade are bound to feature prominently in next week's meeting of G7 finance officials in Italy. U.S. Treasury Secretary Janet Yellen will attend, but it is unclear if Fed Chair Jerome Powell will travel, after he tested positive for COVID-19. That said, financial markets are enjoying a period of remarkable calm right now. Global FX volatility is the lowest in five weeks, U.S. Treasury market volatility is at a six-week low, and the VIX index on Friday fell below 12 for the first time this year. Source: https://lnkd.in/gc63aeBS #International #FinanceInsights  #FinanceNews