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Monetary stimulus would weigh on the Chinese yuan, analyst says
  + stars: | 2023-07-13 | by ( ) www.cnbc.com   time to read: 1 min
Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailMonetary stimulus would weigh on the Chinese yuan, analyst saysVishnu Varathan, Mizuho Bank's head of economics and strategy, says markets are leaning toward optimism when it comes to China tech and growth stocks, but the Chinese yuan remains "a lot more vulnerable to downside risks."
Persons: Vishnu Varathan, Mizuho Bank's Locations: China
Deal cycles are back to closing at about 30 to 60 days in Q2, a Mizuho Bank report said. The demand for generative AI, which operates in the cloud, has driven the stabilization. The big cloud-computing budget cut could be subsiding thanks to generative AI, and Amazon Web Services could benefit massively, according to a new survey of CIOs from Mizuho Bank. CIOs who were focused on trimming cloud budgets in the first quarter are now looking to spend those savings on generative AI. Customers are especially excited about Bedrock, Amazon's foundational model for developers to build generative AI on, because of its privacy features, the survey said.
Persons: CIOs, Mizuho, Bernstein, Bard Organizations: Mizuho Bank, Amazon Web, Mizuho Bank's, AWS, Microsoft, Google, Analysts Locations: Mizuho, OpenAI
Treasury Secretary Janet Yellen concluded her trip to China on Sunday with an appeal for both nations to find 'a way to live together.' 'We believe that the world is big enough for both of our countries to thrive,' she said. We believe that the world is big enough for both of our countries to thrive," she said, according to a transcript of her speech on Sunday. John Kerry, the U.S. special envoy for climate change, is slated for a visit to China later this month, per Bloomberg. Despite Yellen's optimism, at least one analyst feels that relations between the US and China remain tenuous.
Persons: Janet Yellen, Yellen, Biden, Yellen's, Antony Blinken's, Xi Jinping, John Kerry, Vishnu Varathan Organizations: Service, US, of Commerce, Eurasia Group, Biden, U.S, Bloomberg, Mizuho Bank's Locations: China, Wall, Silicon, Mizuho Bank's Asia, Oceania
SHANGHAI, CHINA - NOVEMBER 04, 2022: Buildings at Lujiazui Financial District are illuminated to celebrate the opening ceremony of the 5th China International Import Expo (CIIE) on November 4, 2022 in Shanghai, China. Vcg | Visual China Group | Getty ImagesStock Chart Icon Stock chart iconPointing to soft economic figures from China, including credit data, Citi economists said "stimulus seems to be underway with the weak readings." Barclays economists, writing in a Tuesday note titled "Entering a rate cut cycle," predict China will deliver a cut for every quarter until early 2024. China's central bank controls the benchmark one-year lending and deposit rates, which affect the borrowing costs for banks, businesses and individuals across the country. Mizuho Bank's Head of Economics and Strategy for Asia Vishnu Varathan argued that the latest actions from China's central bank "does not cut it."
Persons: 50bp, Jian Chang, Goldman Sachs, Hui Shan, Asia Vishnu Varathan Organizations: Lujiazui Financial, 5th China, Visual China, Getty, Citi, Barclays, Bank's, Economics Locations: SHANGHAI, CHINA, Shanghai, China, Asia
Growth in US wages and salaries slowed to 1% in the fourth quarter of 2022, down from 1.3% in the previous quarter. As inflation remains high, the Fed may continue hiking interest rates — meaning wage growth could continue to trend slower. Wages and salaries for civilians rose 1% in the fourth quarter from a quarter ago, the Bureau of Labor Statistics said in a Tuesday report. In real terms though, wages and salaries actually declined by 1.2% for the whole of 2022, thanks to high inflation rates. But it doesn't mean the Fed's going to walk away from hiking rates because inflation remains elevated.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 1% to touch a four-month high in morning trade. China has abruptly dropped ultra-strict curbs on travel and activity, unleashing the virus on the nation's 1.4 billion people. The yuan rose about 0.2% to 6.8750 on Thursday. China has partially eased an unofficial ban on Australian coal imports and the Australian dollar made a three-week high overnight just below $0.69. In Europe, unseasonally warm weather has disappointed skiers but been a boon for a euro basking in falling gas prices.
Crude oil futures jumped on Monday after OPEC said its oil policy will remain unchanged from October. Prices were also boosted by hopes that China's eyeing an exit from its Covid-zero stance. The production cut is equivalent to about 2% of the world's demand, and is the largest reduction since the outbreak of COVID-19. Back in October, OPEC+ had said that the decision was made "in light of the uncertainty that surrounds the global economic and oil market outlooks." OPEC's decision came two days after the European Union and the G7 agreed on a $60 a barrel price cap for Russian crude oil — a move that creates uncertainty in the oil markets.
watch nowThe world economy may be facing conditions seen during the 1997 Asian Financial Crisis — aggressive U.S. interest rate hikes and a strengthening U.S. dollar. The Thai baht and other Asian currencies collapsed, triggering the Asian Financial Crisis and leading to slumps in stock markets. Reducing currency disparity with the U.S. dollar reduces the risks of capital flights and foreign exchange rate collapses. Nevertheless, he, too, does not anticipate another Asian Financial Crisis. watch now"They largely let exchange rates absorb the external pressure, rather than supporting the currency by selling FX reserves."
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