News
China Sells Most US Securities in Four Years Amid Yuan Weakness
Chinese investors offloaded the most US bonds and stocks in four years in August, fueling speculation the authorities may have moved to beef up their war chest to defend a weakening yuan. The bulk of the $21.2 billion of sales were in Treasuries and US equities, with funds in the Asian nation also cutting holdings of agency debt, according to data from the US Department of the Treasury released on Wednesday. In August, the onshore yuan tumbled to its lowest against the dollar since November, prompting Beijing to tell state-owned banks to step up intervention in the currency market.
The Speed of Transactions vs the Speed of Settlements
When we analyze the long-term potential of digital assets like bitcoin today, either from a bullish angle or a bearish angle, history can indeed be one of our strongest teachers. Although technology is inherently futuristic in nature, the problems that technology can solve (or fail to solve) come from the past. Therefore, understanding monetary history helps us understand how to approach the potential market size of these new technologies.
Powell Signals Fed to Stay on Hold and Keep Future Hike on Table
Federal Reserve Chair Jerome Powell suggested the US central bank is inclined to hold interest rates steady again at its next meeting while leaving open the possibility of a future hike if policymakers see further signs of resilient economic growth. The comments effectively affirm market expectations for the Fed to skip a rate increase for a second straight meeting when officials gather on Oct. 31 and Nov. 1. The Fed chief also said a recent run-up in long-term Treasury yields, if they persist, could lessen the need for further hikes “at the margin,” echoing his colleagues and underscoring the importance of tightening financial conditions to the rate outlook over the coming months.
Credit Tightens as the Money Supply Falls for Ten Months In a Row
Money supply growth fell again in August, remaining deep in negative territory after turning negative in November 2022 for the first time in twenty-eight years. August's drop continues a steep downward trend from the unprecedented highs experienced during much of the past two years. Since April 2021, money supply growth has slowed quickly, and since November, we've been seeing the money supply repeatedly contract year over year. The last time the year-over-year (YOY) change in the money supply slipped into negative territory was in November 1994. At that time, negative growth continued for fifteen months, finally turning positive again in January 1996.
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