Macro Markets: Strong US Consumption and Risks in China's Central Bank Intervention
Summary:
Cointelegraph analyst Marcel Pechman discusses the reasons behind strong US consumption despite increasing delinquency in auto-loan and credit card balances. Pechman highlights the temporary savings cushion created by government injections and student loan repayment forgiveness. Additionally, he explores the risks involved in China's central bank intervention to support the yuan against the US dollar. The episode is available on the Cointelegraph Markets & Research YouTube channel.
Consumption in the United States remains robust, despite the increasing delinquency in auto-loan and credit card balances, as explained by Cointelegraph analyst Marcel Pechman on the latest episode of Macro Markets. Pechman attributes this resilience to the extra cash savings that consumers accumulated, thanks to government injections and temporary student loan repayment forgiveness. However, a report by JPMorgan reveals that consumers have now spent all of their pandemic savings, which amounted to over $2 trillion at one point. Surprisingly, the stock market has not reflected this expenditure, leading Pechman to question JPMorgan's predictions. Despite potential market risks, such as inflation and a looming recession, Pechman does not recommend betting against the S&P 500.
Switching gears, Pechman also examines the intervention of the Chinese central bank after the yuan reached a 16-year low against the US dollar. The analyst highlights the concern over the market's doubt regarding China's ability to sustain a stronger yuan. This doubt primarily revolves around whether the People's Bank of China's reserves will be sufficient to meet the desired level. Pechman warns that the Chinese central bank's actions have limitations and are ultimately a risky gamble. While there is currently no immediate threat regarding the yuan, it is a development worth monitoring closely.
For a deeper understanding of these topics, be sure to check out the latest episode of Macro Markets, exclusively available on the newly launched Cointelegraph Markets & Research YouTube channel.
Published At
8/25/2023 4:30:00 PM
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