On June 21, 2021, a guy stands outside a brokerage in a business sector in Tokyo, Japan, watching an electric board showing the Nikkei index. Kim Kyung-Hoon/Reuters 1/NO PRISONERS IN BOND LAND, July 9 (Reuters) Bond bulls are on the loose, and they’re not taking any prisoners. On Tuesday, ten-year Treasury rates fell to 1.3 percent, marking the second largest daily decline in 2021. The yields on UK and German government bonds are at their lowest levels in months. It looks that reflation no longer holds sway. That isn’t to say that investors are suddenly anticipating a slowdown. Perhaps the message is that economic growth has peaked, and any increase in inflation will be temporary. Concerns over China’s prospects, as well as an increase in coronavirus strains, add to the trepidation, while the ECB just modified its inflation objective, indicating that it will remain dovish. Many investors who gambled on higher yields as inflation returns fell were forced to reduce losses, providing another another cautionary note to those considering investing in bonds after a four-decade rise. – Bond markets are in a spin as a result of the reflation reconsideration. find out more 2/CONTRADICTIONS IN CHINA The Chinese tech sector is taking a beating as the newly strengthened Cyberspace Administration of China (CAC) pushes down even harder on the country’s heavyweights. Didi Global (DIDI.N), the latest target, has seen its market value plummet by a third in the week since it went public in New York. Others (.HSTECH) are also down considerably as a result of major changes to data and fund-raising restrictions. Speculators are concerned: Is China opening up or forcing businesses to return home? Is Beijing attempting to decrease risk and improve standards by limiting monopolies and controlling data? Other puzzles exist as well. Even if Thursday’s Q2 GDP data confirms a little loss of momentum following a strong first quarter, the economy is considered as chugging along. However, Beijing’s surprise statement that it wants to reduce bank reserve requirements signals that everything is not well. Is China about to cut RRR? -EXPLAINER-Is China about to cut RRR? What are the consequences? – read more -With the Didi investigation, China’s powerful internet regulator stretches its might. 3/ CHECK-INS FOR COMPANIES The second-quarter earnings season could be the pinnacle of the recovery in U.S. company profits since last year’s coronavirus-related misery. According to Refinitiv IBES, S&P 500 corporate earnings increased by 65.4 percent year over year, probably the highest percentage increase since Q4 2009, when corporations were emerging from the Great Financial Crisis. Expectations of slower economic growth in the second half of 2021, on the other hand, have recently fueled a rebound in US Treasuries, with benchmark 10-year rates falling to their lowest level since February. Goldman Sachs (GS.N), JPMorgan (JPM.N), and Bank of America (BAC.N) are among the companies set to announce results this week. Also reporting are Delta Air Lines (DAL.N), UnitedHealth Group (UNH.N), and Kansas City Southern. -PREVIEW-Before results return to normal, US banks will see a huge boost in Q2 profits. find out more JAYTALKING (n.d.) (n.d.) (n. Federal Reserve Chairman Jerome Powell will meet with members of Congress on Wednesday and Thursday, and the timing couldn’t be better. Every worldwide investor is currently attempting to figure out why bond markets seem to have suddenly given up on the reflation trade, so listen in. When the Bank of Japan meets on Friday, it is unlikely to abandon its ultra-accommodative policies. The Bank of Canada is anticipated to reduce its monthly bond purchase program from $3 billion to $2 billion Canadian dollars. On Wednesday, the spotlight in developing markets will be on Turkey, where high inflation is making it difficult for the central bank governor to deliver the rate reduction President Tayyip Erdogan hired him for. – EXCLUSIVE-BOJ is expected to lower its growth prediction for this year as COVID-19 restrictions wreak havoc on the outlook read more 5/ BRINKMANSHIP IN OIL Saudi Arabia and the United Arab Emirates’ public disagreement at OPEC+ has left oil markets in turmoil. Riyadh and Abu Dhabi are at war over a proposed accord that would have included extra oil entering the market, potentially dampening a surge that has seen prices reach two-and-a-half-year highs. Russia is attempting to intervene, but no further discussions have been arranged as of yet. Without a deal, the default will be to maintain current production levels, perhaps driving prices higher. Others, however, argue that a lack of coherence among the group’s members might lead to members ramping up production while ignoring output targets, lowering prices. In any case, one thing is certain: there will be greater volatility in the future. -Saudi-UAE talks are still deadlocked, despite Russia’s intervention to save the OPEC+ accord. find out more Vidya Ranganathan in Singapore, Dhara Ranasinghe, Karin Strohecker, and Marc Jones in London, Lewis Krauskopf in New York, and Edmund Blair in New York contributed reporting. The Thomson Reuters Trust Principles are our standards./n
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