Chinese 1yr loan prime rate cut by 10 basis points, German flash manufacturing PMI declined to 39.1
Weekly Update | 25th August, 2023
Let’s hop straight into five of the biggest developments this week.
If you’d prefer to watch this update, rather than read about it, please click below.
1. China slashed 1-y loan prime rates by 10 basis points
The PBOC cut short term loan rates in another effort to stimulate consumer spending. The 1-year loan prime rate fell to a record low of 3.45% from the previous level of 3.55%. The PBOC now faces a complicated balancing act of simultaneously stimulating consumer spending while propping up the battered Yuan.
2. US existing home sales fell to 4.07m in July
The turmoil in the US real estate industry continued in July with a further 2% fall in sales of existing homes. The decline was worse than the 4.15m which was forecasted by the market, and a decline from the 4.16m in June. The housing sector is plagued with a massive glut in inventory at a time when price inflation and historically high interest rates have hit buyers.
3. German flash manufacturing PMI declined to 39.1
Manufacturing productivity in Germany continued to recede at the steepest rate since the height of the Covid-19 pandemic in May 2020. The minimal movement from the previous 38.9 only reinforced perception that the downturn is longstanding. An intricate combination of rampant inflation, waning demand and high interest rates are expected to further plague the sector.
4. UK flash services PMI falls to 48.7
The outlook for the critical British service sector deteriorated, marking the end of a six-month expansion. The 48.7 contraction was a sharp decline from the 51.5 expansion reported in July. Weak demand due to pessimistic consumer sentiment, high borrowing costs and inflation underlie the negative outlook.
5. US unemployment claims fall to 230k
The US labour market is stabilising after showing seasonal weaknesses in recent weeks. The receding unemployment claims are reinforcing confidence of a possible soft landing for the US as the global economy loses steam. From the previous 240k upward revision, the report fell to 230k, a much better posting than market expectations of 239k.
Below shows the performance of a range of futures markets we track. Some of these are included within the universe of our multi-strategy hedge fund.
Silver and gold rallied on stimulus news out of China with markets upbeat that the interest rates cut will enhance consumer spending but may also reignite further inflation. The VIX has held relatively stable over the course of the week as US equities have had a small bounce. Outside of this, it has been a quiet week when assessing these markets on a weekly basis, however over the course of the week, we have seen significant volatility from fixed income and energy markets due to hopes of a softer landing than expected.
The ASX has had another very mixed week, miners experienced solid performance as iron ore rebounded after the prime rate cut in China. The big 4 banks had another mixed week of performance, with nothing really driving price action either way. More defensive names, WOW, WES, CSL, RMD and TLS all experienced selling pressure once again as a rotation out of last year's winners continued. GMG was outstanding for the week, after solid results.
Below shows our proprietary trend following barometer which captures the number of futures contracts within our universe hitting new short and long-term trends.
Never miss an update
Enjoy this wire? Hit the ‘like’ button to let us know.
Stay up to date with my current content by
following me below and you’ll be notified every time I post a wire
Hue Frame is the founder of Frame Funds Management. Frame Funds is a quantitative funds management company, that manages assets for institutional and wholesale clients, and proprietary funds.
........
This information is prepared by Frame Funds Management Pty Ltd (ACN 608 862 442) (Frame Funds, we or us) is a Corporate Authorised Representative (CAR No. 123 9068) of Primary Securities Limited (ACN 089 812 812 635) and is intended only for "wholesale clients" within the meaning of sections 761G and 761GA of the Corporations Act 2001 (Cth). This material is not intended to constitute advertising or advice (including legal, tax or investment advice) of any kind. These materials are not to be distributed to any person who does not qualify as a wholesale client and must not be copied, reproduced, published, disclosed or passed to any other person at any time without the prior written consent of Frame Funds. Primary Securities Ltd (ACN 089 812 635 635, AFSL 224 107) is the Trustee of, and issuer of units in, the Frame Futures Fund and the Frame Long Short Australian Equity Fund (Funds). In deciding whether to acquire, or to continue to hold, units in the Fund please read the current Information Memorandum available from Frame Funds. Past performance of the Funds is not a reliable indicator of future performance. The value of an investment in the Funds may rise or fall. Returns are not guaranteed by any person. Total returns are calculated before tax and after ongoing management costs. In preparing this information, we have not considered your investment objectives, financial situation or personal circumstances and therefore the Funds may not be suitable for you. Neither Frame Funds, Primary Securities Ltd, nor any of their respective related parties, directors or employees, make any representation or warranty as to the accuracy, completeness, reasonableness or reliability of the information contained in this publication or accept liability or responsibility for any losses, whether direct, indirect or consequential, relating to, or arising from, the use or reliance on any part of this material. Any rates of return, forecasts or estimates contained in this publication are not guaranteed. The content of this publication is current as at the date of its publication and is subject to change at any time. It does not reflect any events or changes in circumstances occurring after the date of publication.
5 topics
Hue Frame is the founder of Frame Funds Management. Frame Funds is a quantitative funds management company, that manages assets for institutional and wholesale clients, and proprietary funds.
Expertise
Hue Frame is the founder of Frame Funds Management. Frame Funds is a quantitative funds management company, that manages assets for institutional and wholesale clients, and proprietary funds.
Expertise
Comments
Comments
Sign In or Join Free to comment
most popular
Equities
The 7 zombie companies lurking on the ASX 300
Livewire Markets
Equities
18 stocks backed by a fund that returned 42% in 12 months
Livewire Markets