Reasons for market correction

Reasons for market correction

1. Fitch credit rating downgrade
2. Sluggish Manufacturing Index
3. Poor job opening
- So far, that's just it.

Here's what I'm personally more sensitive to.

1. The US Treasury Department's existing government bond issuance plan is raised from about $700 billion to $100 million
2. This caused the 10-year US Treasury yield to break through 4% last night.
3. It is judged that this may be one of the reasons for the downgrade of the pitch.

Asia
1. With the Australian benchmark interest rate frozen the previous day, the Australian dollar plummeted and dragged down along with the Asian exchange rate.
2. The BOJ intervened in the government bond market when the Japanese 10-year yield soared despite the recent 'verbal' statement that YCC was allowed up to 1%
- This is judged by the market as “not tightening” and will not hesitate to openly short the yen, which again becomes a factor in strengthening the dollar by longing the dollar and shorting the yen.
3. Japan viewed 150 yen as a psychological bottom line.  Last year, I intervened in the foreign exchange market at 150 yen.
4. If we take the current easing stance, there is a possibility that tightening will eventually be strengthened around 150 yen.


Fed member
1. Ostan Goolsby, the governor, has consistently confidently commented on disinflation, but his words have changed in the last two days.  Contents are as follows


Ostan Goolsby (Chicago Fed President)
- Recent economic data have given hope that inflation can be cooled without hurting the economy too much, but before the Fed stops raising rates, we want to see if this develops into a trend.
- Previously, we've seen progress over short periods of time, like last summer, but it turned out to be fake improvement.
- It is too early to say what decision the Fed will make at the September FOMC meeting.
- I don't want to pre-arrange what we're going to do in September.  When you're near a turning point, every meeting is a 'live meeting' (nothing decided) and you try to catch trends, not monthly metrics.

2. It is presumed that this reflects concerns about the impact of rising gasoline prices due to the recent shutdown of the Exxon oil refinery in the US and the rise in WTI prices due to Saudi Arabia's willingness to cut production.

For information on the issuance of government bonds, see Yonhap Infomax News below.


US investors fear 'treasure tsunami' over $1 trillion borrowing estimate

As the U.S. Treasury Department expanded its debt estimate for the third quarter of this year to more than $1 trillion, investors are growing concerned about a “tsunami in government bonds,” MarketWatch reported on the 1st (local time).

Analysts said that demand for US Treasuries, which are expected to be issued in large numbers, could start to dry up as the outlook for the US government's fiscal deficit is deteriorating and borrowing pressure is intensifying.

“The risk is that demand from bond buyers overseas or domestically may not be sustained,” said The Simpson Economist. A higher interest rate could lead to liquidity problems.”

Barclays cautioned against predicting the end of a typical bond rally cycle, noting that "it is likely that the supply of US Treasuries will increase sharply over the next few quarters."

Barclays said, "We have been predicting that the US government will soon increase the bidding scale to a significant level across all sectors, which is likely to exceed the peak of government bond yields during the Corona 19 period. "We wouldn't be surprised if net issuance of US Treasuries approaches $2 trillion next year," he said.

http://news.einfomax.co.kr/news/articleView.html?idxno=4275989



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