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Bloomberg Daybreak: Asia Edition
Equities Rebound on US Jobs Data Spark
Aug 9, 2024
Cheryl Smith, an economist and portfolio manager at Trillium, Mary Nicola, a Bloomberg M-LIV strategist based in Singapore, and Eva Lee, head of Greater China Equities at UBS, dive into the financial turbulence impacting global markets. They discuss the implications of US jobs data on investor sentiment and the challenges facing China's economy, including inflation and weak demand. The trio also explores strategies for navigating current market conditions, particularly in the tech sector amid an uncertain earnings season.
21:40
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Quick takeaways
- The unwinding of the yen carry trade is significantly affecting market volatility and traders' leverage, emphasizing the need for market stability.
- China faces deflationary pressures due to weak domestic demand and a struggling property sector, highlighting the urgent need for effective economic policies.
Deep dives
Impact of Yen Carry Trade Unwind
The recent volatility in the markets has been significantly influenced by the unwinding of the yen carry trade, which JPMorgan estimates is 75% complete. This trade had previously thrived due to the stable interest rate differential between the U.S. and Japan. However, the rapid unwinding revealed the extent of traders' leverage and susceptibility to changes in interest rates and exchange rates. Understanding the implications of this unwind is critical for market stability moving forward.
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