🚨 Next week could completely change the Federal Reserve’s decision on interest rates in October.
Monday: U.S. markets reopen as fighting with Iran continues and uncertainty lingers over a potential deal on the horizon, impacting oil prices and inflation.
Tuesday: A decline in the number of job openings in the August JOLTS report, giving the Federal Reserve a fresh look at whether the labor market is weakening or improving.
Wednesday: The August PCE inflation report is released, along with the final estimate for the gross domestic product for the second quarter.
The Federal Reserve will receive new data on inflation and growth at the same time.
Thursday: The September ISM manufacturing index is released.
August was 54.6, and a higher reading means higher economic activity.
Friday: The September jobs data is released, including the unemployment rate, which is another key component of the Federal Reserve’s labor-market picture.
Inflation data, GDP, jobs, and manufacturing will all be released in the same week.
Any signs of a strong labor market and rising inflation will almost certainly lead to confirming another 25-basis-point interest rate hike in October.
$900 billion has been wiped from stocks, cryptocurrencies, and precious metals since the start of the U.S. market due to Iran’s statement of non-delivery.
🚨 China cuts its holdings of US Treasuries to the lowest level in 18 years 🇨🇳🇺🇸
China continues to reduce its exposure to US Treasury securities...
📉 China’s holdings reached $618 billion in July, down from more than $1.3 trillion at the previous peak.
What’s notable is that this trend comes as part of China’s ongoing diversification of its reserves, with some funds shifting into other assets. Also, some of China’s holdings may be kept through custodians outside the United States, so Treasury figures don’t necessarily reflect all of its true exposure.
💰 Why does it matter to markets?
Lower foreign demand for Treasuries could contribute to downward pressure on bond prices and higher yields, but the impact doesn’t depend on China alone; July data also showed continued foreign inflows into US assets, with net TIC flows of $83.7 billion.
👀 So investors are watching:
🇺🇸 US bond yields 💵 The dollar 🥇 Gold 📈 Stocks ₿ Bitcoin
💬 Today’s question:
If China continues to reduce its holdings of US Treasuries, which asset do you think will benefit the most?
Urgent: 🇺🇸 Elon Musk says there are "hundreds, perhaps thousands, of fraud gangs belonging to nearly all nationalities, and they steal money from American taxpayers."
Inflation is over 30%, while bond yields are exploding.
And now, a liquidity crisis has hit its private investment funds.
Reports indicate that investors withdrew $1 billion in a single day, and the authorities ordered the liquidation of 131 funds worth $18.3 billion, affecting about 350,000 investors.
Turkey is now cutting margin requirements from 35% to 20%, providing more liquidity and using government-linked funds to support stocks.
A currency crisis. An inflation crisis. A bond crisis. A stock sell-off.
And now, a liquidity crisis.
Turkey is getting hit from almost every direction at the same time, and that usually ends very badly.
Urgent: 🇸🇦🇨🇳 Saudi Arabia withdraws from the Chinese system for digital currency and blockchain technology, which aims to reduce dependence on the US dollar.
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