TOKYO — As Fumio Kishida bows out of Japanese leadership, let’s first dispense with the spin about why. No, Prime Minister Kishida isn’t falling on his sword because of slush fund scandals. These are about as rare for his Liberal Democratic Party as Tokyoites eating raw fish. What derailed Kishida was an underperforming economy – […]

The post Why Japan’s Kishida finally called it quits appeared first on Asia Times.

Chinese leader Xi Jinping is vying with little success to turn stock bears into bulls. But over in the bond market, China faces the opposite problem with irrational exuberance pushing long-term yields too low.

That has authorities scrambling to tighten their grip on the globe’s third-biggest government debt market. On Monday, prices tumbled as the People’s Bank of China (PBOC) intervened assertively in the market. It was the worst day in 17 months for China's 10-year treasury futures, sending yields up 4 basis points.

The recent plunge in bond rates is putting downward pressure on the Chinese yuan at a moment when Xi favors a stable-to-firmer exchange rate. The problem for Xi and the PBOC is that bond bulls argue the rally is supported by underlying fundamentals – including slowing growth and deflationary pressures – and has room to grow.

The post China has a bond vigilante problem appeared first on Asia Times.

As global investors dump US and Japanese stocks, China’s beaten-down markets are suddenly looking more attractive.

The debate over whether China is “uninvestable” has plagued Xi Jinping’s government since late 2020. That was back when Xi’s Communist Party cracked down on tech platforms, starting with Jack Ma’s Alibaba Group.

It hardly helped that Xi’s draconian Covid-19 lockdowns drove China’s growth into the red. Or that Xi’s party was slow to add fresh stimulus to Asia’s biggest economy when it arguably needed it most.

Now, China has a unique opportunity to shine as a bastion of stability as the US and Japanese economies face fast-mounting challenges.

The post China looking like a ‘buy’ as US, Japan markets sag appeared first on Asia Times.

As the Japanese yen surges, investors are grasping for correlations — past events that provide some perspective on what might be in store for currency markets.

The search has turned frantic as the Nikkei 225 Stock Average leads a global sell-off in stocks. The Bank of Japan’s July 31 rate hike was followed by a softer-than-expected US employment report. On Monday, the Nikkei plunged 4,451 points, more than Black Monday in 1987.

Arguably, no good corollary exists thanks to uncertainties surrounding Japan thanks to the “yen-carry trade.” Though the US dollar is by far the global reserve currency, borrowing cheaply in yen and deploying those funds in higher-yielding assets elsewhere became as crowded a trade as history ever saw.

The post Nikkei’s Black Monday 2.0 triggers contagion talk appeared first on Asia Times.

TOKYO – With all the focus on the US Federal Reserve and Bank of Japan, it’s easy to forget where the most important monetary calls are being made this year: Beijing. Sure, Fed Chairman Jerome Powell said Wednesday (July 31) that big actions are coming. A September interest rate cut is “on the table,” provided […]

The post Forget the Fed and BOJ; PBOC holds the monetary cards appeared first on Asia Times.

This week is offering quite the split screen to investors hoping China would step up efforts to raise its capital markets game.

On one screen, the China Securities Regulatory Commission (CSRC) pledged to improve market operations, strengthen comprehensive research capabilities, deepen response mechanisms to manage market risks and hone regulations for trading.

On the other, signals that Beijing is increasing opacity surrounding the flow of capital. Specifically, how much capital international funds deploy into and out of Asia’s most volatile major stock market.

The post Less transparency, less faith in China stocks appeared first on Asia Times.

TOKYO — Suffice to say, 2024 hasn’t turned out the way Japanese Prime Minister Fumio Kishida expected.

Rather than being a standout in Asia, Japan’s economy is skirting recession. The Bank of Japan still hasn’t hiked interest rates, though Tokyo had fully expected a tightening move or two by now.

Instead of coasting to victory in September’s Liberal Democratic Party election, Kishida’s approval rating is stuck in the low 20s. Deflation-plagued China is acting more of a drag on than growth engine for Asia.

Yet the biggest blow to all Kishida thought he knew about 2024 is coming from Washington.

The post Why the ‘Trump trade’ has Asia in a panic appeared first on Asia Times.

Pan Gongsheng isn’t famed for acrobatic skills. But on Monday (July 22), the People’s Bank of China governor embarked on a routine that will test his monetary balance, agility and motor coordination in tantalizing ways. The PBOC’s move to cut a key short-term policy rate for the first time in almost a year surprised many traders. […]

The post China cuts key rate amid worst deflation since ’99 appeared first on Asia Times.

At this week’s Third Plenum meeting, President Xi Jinping’s Communist Party sent many of the right signals to skeptical investors worried about the trajectory of Asia’s biggest economy – including pledges to “unswervingly encourage” the private sector. But Xi’s team picked a risky moment to keep global investors guessing about how it plans to revitalize a US$17 trillion […]

The post China’s Third Plenum vagueness misses the moment  appeared first on Asia Times.

Chinese leader Xi Jinping can’t be happy his Third Plenum extravaganza is competing for headlines with events 11,000 kilometers from Beijing.

In Xi’s defense, it’s hard to compete for headlines with an assassination attempt against former US President Donald Trump half a world away. That, coming just over two weeks after Trump’s fiery debate with a cognitively challenged President Joe Biden.

But Trump's choice of JD Vance as his running mate could signal an even bigger upstaging of Xi’s grandest economic plans going forward.

The post Trump’s JD Vance problem is now China’s, too appeared first on Asia Times.

In the middle of an otherwise mundane Congressional hearing on July 9, US Treasury Secretary Janet Yellen made an extraordinary admission: De-dollarization is now her biggest fear.

Though it might sound obvious to many, it’s a stark about-face for a US economy czar who’s long denied the dollar is in danger of losing its status as dominant reserve currency because of sanctions or other policy missteps. In March 2022, for example, Yellen said “I don’t think the dollar has any serious competition and it’s not likely to for a long time.”

The former Federal Reserve chair noted that “when you think about what makes the dollar a reserve currency, it’s that we have the deepest and most liquid capital markets of any country on earth. Treasury securities are safe, secure and immensely liquid. We have a well-functioning economic and financial system and the rule of law. There really is no other currency that can rival it as a reserve currency.”

The post Yellen’s de-dollarization fears will only get worse appeared first on Asia Times.

TOKYO - After years of head fakes, prevarications and disappointments, is the Bank of Japan finally on the verge of a credible monetary tightening?

A growing number of investors are betting that the BOJ’s July 30-31 policy meeting will be the moment global markets have been waiting for several years now. One big reason: May saw the biggest base pay jump since 1993, an increase that could seal the deal for an interest rate hike.

Are markets right? Only time will tell given punters’ dreadful track record of predicting BOJ pivots. For 15 years now, the BOJ has pledged ad nauseam that it would “normalize” interest rates and end a quantitative easing (QE) experiment first launched in 2001.

The post Is Bank of Japan finally ready to really raise rates? appeared first on Asia Times.

Anyone hating their job at the moment should spare a thought for Federal Reserve head Jerome Powell. In real time, investors can observe the extent to which Chairman Powell is confused about the direction of US interest rates.

Traders have stopped laughing at former Treasury Secretary Lawrence Summers’ contention the Fed’s next step will be to tighten, not ease. There’s little humor to be found in the Fed’s dilemma as inflation gyrates, the dollar soars and US electioneering descends into chaos.

Loads of prominent economists still think Summers is dreaming. Among them is Mark Zandi, chief economist at Moody’s Analytics.

The post Which will mess up the most – Fed, BOJ or PBOC? appeared first on Asia Times.

China’s leadership gathering later this month could be the moment policymakers devise to defuse the US$13 trillion time bomb imperiling Asia’s biggest economy.

Though China’s property crisis gets the headlines, debt troubles plaguing municipalities across the nation also require urgent action.

At issue is the explosion of local government financing vehicles (LGFVs) in recent years. Such debt, the vast majority of it the off-balance-sheet kind, now almost rivals China’s annual gross domestic product (GDP).

The post China to defuse its $13 trillion LGFV debt time bomb? appeared first on Asia Times.

Southeast Asia’s sudden pivot toward the BRICS nations is a global game-changer that few in Washington saw coming.

In recent days, Malaysia detailed its ambitions to join Brazil, Russia, India, China and South Africa. Thailand and Vietnam are also among the Association of Southeast Asian Nations members expressing similar interest.

In Indonesia, there’s growing awareness that Argentina, Egypt, Ethiopia, Iran, United Arab Emirates, Saudi Arabia and other “Global South” nations have a point in vying to join this burgeoning intergovernmental organization.

The post Southeast Asia has its reasons for pivoting to BRICS appeared first on Asia Times.

Currency traders betting on a rebound in the yen would be wise to look past the officials currently in charge and listen instead to policy veterans who know better. Over the last year as the yen was recording three-decade lows, officials such as Finance Minister Shunichi Suzuki, top currency diplomat Masato Kanda and Bank of Japan […]

The post 25-year weak yen obsession is blowing up on Tokyo appeared first on Asia Times.

WASHINGTON – The most disturbing thing about forecasts that the US national debt will hit $50 trillion by 2034 is that the true figure surely will be much bigger. The Congressional Budget Office noted that the federal debt will hit 122% of gross domestic product a decade from now, dwarfing America’s fiscal position after World […]

The post US debt moving toward $50 trillion isn’t whole story appeared first on Asia Times.

China’s property crisis is back in global headlines for all the wrong reasons as Asia’s biggest economy goes wobbly.

The nation’s property boom was among the engines that turned China into an international powerhouse. Now, a years-long housing downturn is presenting Xi Jinping with arguably the biggest challenge of his decade-plus as Chinese leader.

Data for May show that government stimulus efforts to date aren’t gaining the traction Xi’s inner circle had hoped. New homes sales fell roughly 4% last month year on year after a 3% decline in April. It’s the worst run for the sector in nearly 10 years. Property investment is down 10% since the start of the year compared to the January-May period a year ago.

“This data further indicates that the property sector will remain a headwind on growth this year,” says Lynn Song, chief Greater China economist at ING Bank, adding that they should “ring some alarm bells” in Beijing.

The post China’s GDP troubles point to need for bolder reform appeared first on Asia Times.

WASHINGTON — Janet Yellen can’t be happy as bond guru Bill Gross shines a bright spotlight on a fast-emerging risk to US Treasury securities: the November election.

In recent interviews, the former chief investment officer of Pacific Investment Management Co (PIMCO) has talked up European debt as a ready alternative to securities sold by US Treasury Secretary Yellen’s team.

“As we move to November, and something becomes more clear as to who might or who might not win, the uncertainty plus the potential policy implications could impact Treasuries significantly,” Gross told Bloomberg.

Gross’s apparent pivot to Europe comes even after electoral shocks in Paris and Berlin. In European Parliament elections on June 9, France’s Emmanuel Macron and Germany’s Olaf Scholz suffered setbacks versus far-right parties.

The post European debt now a better bet than US Treasuries appeared first on Asia Times.

“The China equity trade is back.” Or at least so says Société Générale, which reckons Beijing’s recent efforts to fix the property crisis has moved Asia’s biggest economy beyond the “confidence crisis” that dominated China’s market narrative in 2023. A reasonable view? Given how China’s property stocks last week entered a technical bear market amid […]

The post China’s property fixes leave investors in suspense appeared first on Asia Times.