Auto stocks including Tesla fall after Tesla radically cut prices on its electric vehicles in bid to boost flagging demand.
Tesla dropped prices by nearly 20% in the US on some versions of the Model Y SUV, its top seller. It also reduced base price of Model 3 by about 6%. Source: Bloomberg, HolgerZ
US will hit its debt limit Thursday, start taking steps to avoid default, Yellen warns Congress
Source: Bloomberg, HolgerZ
Bank of Japan's daily government bond purchases at an all-time high!
The Bank of Japan is buying huge amounts of government bonds in order to cap the yield on Japanese 10-year government bonds to 0.5%. Yesterday the BoJ bought 4.6 trillion yen and today it is close to 5t yen. Note that at the last meeting, the BoJ had decided on a 9t yen bond buying program ...per month! Source: Bloomberg
Commodities are up double digits in the last 3 months
Over the last 3 months, Gold broke out, then silver, copper, and others are already up double digits in the last 3 months. Will Energy & agricultural commodities be the next ones to move? Steep moves in commodity prices often lead to a ripple effect in the market. Source: Crescat Capital, Bloomberg
First USD-denominated bond issued by a Chinese property developer since September 2021!
New positive sign for the Chinese real estate sector? After 16 months of waiting, the dollar-denominated debt market has reopened for a Chinese property developer, Wanda Properties, without any guarantee from the Chinese government. This new issue was well received by investors as the book was oversubscribed four times. However, the majority of investors were from Asia (>80%) and while this news is positive for the sector (and its liquidity problem), it does not solve the problem of sales (demand) for now. Source : Bloomberg
Busiest week ever for European bond primary market!
With one day to go, corporate financing via the Europe's public bond market has reached a record weekly level with over $100 billion of debt printed to date. Source: Bloomberg
Is the Bank of Japan losing control of its bond market?
The Japanese yen soared overnight after Japan's Yomiuri reported that the BoJ is to review the side effects of its massive monetary easing at its policy meeting next week and may take additional steps to correct distortions in the yield curve, i.e there is a chance the BOJ will once again "surprise" the market with yet another Yield Curve Control tweak. JGB 10y has penetrated the 0.50% cap, reaching 0.568%. The USDJPY had tumbled as low as 128.66 from 132 yesterday, before bouncing modestly just above 129. Source: www.zerohedge.com, Bloomberg
While inflation is cooling down, The Fed might need to keep tightening
While US inflation is materially lower from its peak, the chart below from Trahan Research shows why the Fed's job is probably NOT over. This chart shows the contribution of both Services and Goods inflation. Even if Goods CPI goes to 0% , Services inflation alone would still leave Core inflation above 5%. As long as core inflation stays above 5%, the Fed is unlikely to pivot.
