Stocks fall, Chinese yuan crosses 7.2 against dollar
Chinese yuan expected to return to ‘reasonable range’ soon
The yuan is likely to return to a “reasonable range” between six and seven against the US dollar – as early as next year, said Han Baojiang, director of the economics department of the Party School of the Communist Party of China Central Committee. .
That’s according to a CNBC translation of his Mandarin-language remarks at a virtual event hosted by the All China Journalists Association.
He said that in his view, the depreciation of the yuan is related, to some extent, to China’s current economic difficulties.
Next month’s 20th National Congress of the Communist Party of China should provide a clearer outline of politics, which will help expectations, he said.
Han said in response to a separate question that Chinese President Xi Jinping’s opening message will be prominent in the congress report, and after the congress he expects China to open up more than ever. .
— Evelyn Cheng
The Indian rupee hits a record high of 81.94 against the US dollar
The Indian rupee weakened to a record high against the US dollar, hitting 81.940 to the dollar. It last traded at 81.905 against the greenback.
The strength of the US dollar has strengthened by almost 10% against the Indian rupee so far this year.
US 10-year Treasury yield tops 4% for first time since 2010
CNBC Pro: Credit Suisse Says Now’s the Time to Buy Two Green Hydrogen Stocks — and Prices One More Than 200% Up
Credit Suisse says it’s time to enter the green hydrogen business, with a number of catalysts in place to boost the power of clean energy.
“Green hydrogen is a growing market – we are increasing our 2030 market estimates by [over] 4x,” the bank said, predicting green hydrogen production will increase about 40 times by 2030.
He names two stocks to play the boom – giving a rise of more than 200%.
CNBC Pro subscribers can learn more here.
Chinese yuan at lowest since 2008, dollar index strengthens
The offshore and onshore Chinese yuan rose above 7.2 against the dollar, hovering at the weakest levels since early 2008.
The US Dollar Index also gained 0.33%, trading at 114.47.
Japan’s consumer inflation may fall in 2023: BOJ meeting minutes
Consumer inflation excluding fresh food is expected to rise this year, but the rate of increase will subsequently slow on energy prices, according to the Bank of Japan’s July meeting minutes.
A few members also said inflation, excluding fresh food and energy, was unlikely to reach 2% over its projection period. This CPI reading was 1.6% in August.
“These members expressed the view that unless commodity prices continue to rise, the CPI inflation rate is expected to decline from fiscal year 2023,” the minutes read.
Regarding the yen, a member of the BOJ board said that the downward pressure on the currency could be eased if a slowdown in the global economy leads to lower inflation and interest rates in the world.
Another member said the yen could even appreciate if the global economy experiences shocks.
CNBC Pro: Asset manager reveals what’s next for stocks — and shares how he’s trading the market
Neil Veitch, chief investment officer at Edinburgh-based SVM Asset Management, says he expects the macro landscape to remain “quite challenging” for the rest of the year.
Speaking to CNBC Pro Talks last week, Veitch named the key drivers that could help the stock market become “more constructive” and shared his views on growth versus value.
CNBC subscribers can find out more here.
— Zavier Ong
Questions over profits and potential recession mean more sales could be ahead
The Dow Jones and S&P 500 have fallen for six straight days, with many seeing large-scale selling typical of so-called “washout” days.
This can sometimes be a counter buy signal on Wall Street, but many investment professionals are skeptical that the sell will end. One reason is that earnings forecasts for next year still show solid growth, which would be unlikely in a recession.
“We know that if we start to see a reversal in 2-year yields…and if we start to see a reversal in the dollar, that gives us the opportunity to rebound from these extremely oversold conditions,” said Andrew Smith, director investments. strategist at Delos Capital Advisors in Dallas. “But I’m having a hard time reconciling in my mind that the earnings story will be as good as expected.”
Additionally, dramatic moves in the bond and currency markets mean “something snapped” and it may be wise to wait for that information to come out, Smith said.
On the positive side, Smith pointed to a strong labor market and signs of continued travel spending as a sign that the US economy may be able to avoid a major recession.
The US 10-year rate is approaching the key level of 4%
The 10-year Treasury yield is approaching 4%, a level it has not reached since 2010.
The US 10-year is the benchmark yield that sets the price of mortgage rates and other consumer and business loans. It jumped higher this week as UK gilt yields rise and on expectations of an aggressive Federal Reserve.
The yield was 3.96% in afternoon trading. The 10-year yield reversed an earlier decline and gained around basis points. (One basis point equals 0.01 percentage point)
“It’s really impressive, and I just don’t think anyone is ready to step in and catch the falling knife yet,” BMO’s Ben Jeffery said. He added that a lack of liquidity has also pushed up yields, which move opposite to prices.
Jeffery said the yield was also rising ahead of the 5-year note auction at 1 p.m.
He said the 10-year tested the 4% level in 2010. “The last time we were sustainably above 4% was in 2008. There is another technical level at 4.10 %, then there’s not much to note until 4.25%,” he said.
— Patti Domm