Discover and read the best of Twitter Threads about #interestrate

Most recents (19)

It was evident. Interest rates would rise as #inflation started spiralling.

To ride through the rate hike cycle⬆️, #FloaterFunds were touted as an ideal #investment option.

But, so far, they haven’t done well.

A 🧵on why #FloatingRateFunds haven’t delivered yet.
First, some basics.

When #InterestRates rise📈, bond #prices fall📉. Why? Investors would rather buy new papers at a higher rate than old ones with lower yields.

#FloaterFunds are not impacted by interest rate movement. There’s a simple explanation.👇
As the #InterestRates rise, the yields on floating-rate bonds also increase.⬆️

So, #investors don’t need to sell them to buy new papers offering higher interest rates.

But the converse is true, too. So, when interest rates fall📉, #FloaterFunds become unattractive.
Read 10 tweets
It could be slowflation not #stagflation – and it’s better for the equity markets…

By @jainrounak
With the pandemic & the #RussiaUkraineConflict, global economies have been affected by too many factors that have made central banks alter the course too many times, resulting in confusion over which way the economy will go and the shape of recovery.

#stagflation #RBI
Experts around the world have been worried about #recession and #stagflation — a combination of slow growth, inflation and unemployment. But now, analysts at UBS suggest things are looking up, stating that the global economy could be staring at ‘slowflation’ and not stagflation.
Read 8 tweets
Numbers don’t lie, but they can be deceiving.

A good salesperson can sell you a poor product by using numbers🔢to his advantage.

And you really won’t notice unless you ask the right questions.

A 🧵 on how you can be fooled with data when buying #insurance policies.👇
▪️ Number Game In #Annuity or #Pension Plans

The sales pitch goes like this:

If you invest Rs 10 lakh now, you will start getting around Rs 1 lakh a year after a decade--a 10% assured return on your #investment.

But there’s a catch.👇
It’s not 10% #returns. Here’s why.👇

For the first 10 years, there will be no payout. During this time, your #money will earn interest and grow.📈

Even if you invest in FD and earn a 5.5% #InterestRate , your money will grow to Rs 17 lakh in a decade.
Read 11 tweets
The Reserve Bank of Australia has hiked the interest rate for the first time in a decade in response to soaring inflation. #7NEWS Image
The @RBAInfo has raised interest rates by 25 basis points, bringing the cash rate to 0.35%. It is the first time interest rates have been increased since November 2010. Both @ANZ_AU and @Westpac have predicted they're looking at 2% of increases by mid next year. #7NEWS
Australians with mortgages are bracing for increased loan repayments after the Reserve Bank pulled the trigger on higher interest rates. The RBA board upping its official rate by 25 basis points to 0.35 per cent., the first hike in more than a decade. Image
Read 8 tweets
Lot of #AMCs come up with different ideas, themes, sectors.

These are demands from #Investors as they have done well in recent past.

AMCs are manufacturers & will offer what is in demand.

Final choice to say YES or NO lies entirely with Investors based on their #NEEDs
What should investors choose and what should they ignore. A point by point guide on where and why to invest in certain #themes, #MarketCap bias, #Sectors, #AssetClasses etc.

What should be criteria for these selections and what should guide them to resist from Investing?
Lets start with #Debt:

Keep enough money as 1 year of your expenses as #EmergencyFunds in #LiquidSchemes

You already have enough exposure to debt as:

1. #PPF
2. #TaxFreeBonds
3. #FDs

No need for separate debt allocation if you are investing thru #AssetAllocation (AA) or #DAAF
Read 16 tweets
At yesterday’s #FOMC meeting, the Committee revealed more expected tightening and further steps toward #tapering #asset purchases than they had previously. We see these as steps in the right direction.
Yesterday’s @federalreserve statement and press conference suggest that the Committee believes progress has been made toward its goals, but that there’s still some room to go to hit the recently re-defined objective of maximum #employment.
Still, it’s now time to set up for the end of this long-running #EmergencyPolicy-focused movie.
Read 10 tweets
Real interest rate offers an important clue for understanding China’s #macroeconomy now and beyond, according to CF40 report “Changes of Real Interest Rates and Combination of Fiscal and Monetary Policies”:…

In 2000-2011, as #savings and #investments continue to boom in #China, the real #interestrate fell. The turning point arrived in 2011. After that until 2019, the savings rate and investment rate kept falling, and the real interest rate picked up. How to explain the change? ...2/7
The decline in the real interest rate in the first period was caused by the falling relative price of capital goods, deteriorated income distribution, longer life expectancy and lower dependency ratio...3/7
Read 7 tweets
The sheer magnitude of the moves in many #economic #data points in recent months has overshadowed the nuances of those reports. For instance, the June @ism non-manufacturing index came in at 57.1 yesterday, a record 11.7-point gain and 7.1 points greater than expectations. Image
And when we look at the #ISM survey report of #commodity prices and what’s in short supply, there are many items that aren’t surprising: cleaning products, disinfectants and hand sanitizer are all up in #price and in short #supply.
Much more interesting, however, is the fact that #labor for #construction and subcontractors is back to being cited as in short #supply
Read 5 tweets
Recently,there's been huge outcry over #Cessation of 7.75% #RBI #taxablebonds,that were issued in Jan2018,with 7yr maturity

Outcry is unjustified

#Repo rate is 4% now,lowest in last 20 yrs,to benefit borrowers

Its only practical to see realignment
of lending rate&savings rate!
For those in tax bracket of 30%,return is 5.4%,while for those in lowest bracket of 10%,post-tax return is 6.97%

Those in 30% bracket but with 5Cr+ invested,get post tax return of 4.4%

#Cessation means no fresh subscribers;Existing investors dont need to redeem till maturity!
Those alleging,#SeniorCitizens will get adversely affected by #Cessation of these bonds,are wrong

Senior citizens can invest in #VayaVandanaYojana,with 10 yr lock-in,at 7.4%;This scheme was to expire on 31stMarch2020,but has been renewed for another 3yrs by @narendramodi gov👍
Read 6 tweets
Countries are extremely easing monetary policies, slashing interest rates and RRRs, to counteract the pandemic' blows on the financial market and real economies. #QE will inevitably expand the balance sheets of central banks, but it won't necessarily speed up total credit growth.
The massive easing of developed countries will spill over, especially to emerging markets: its income effect stabilizes global financial market and promotes economic pickup; but its relative price effect hampers capital flows and exports of emerging markets.
For now, the income effect is stronger in China than the relative price effect, which hasn't placed much upward pressure on RMB yet.
Read 7 tweets
With a strong stimulus package and a contained virus, #China’s growth prospects for 2020 are not yet lost, said Yu Yongding via East Asia Forum:…
In real terms, China’s 2019 #GDP was 19.7 trillion RMB in 2019 Q1 and 69.45 trillion RMB in the remaining 3 quarters. Official figures place China’s GDP at 18.4 trillion RMB in 2020 Q1.China’s GDP grew 6.1% in 2019.
Assuming that China maintains a real growth rate of 6% in the remaining 3 quarters of 2020, the annual growth rate will be about 3.2%. But the #COVID19’s unpredictability makes any economic forecasts problematic. China also has to be vigilant against a resurgence of the virus.
Read 6 tweets
Zhang Bin, senior fellow of CF40, believes that specific measures to deal with the #novelcoronavirus does not require special responses from #aggregatepolicy. The measure shall target towards specific regions, industries and sectors.
Given weak economic growth and relatively low prices, it is necessary to relax aggregate economic policies, such as increasing #fiscalexpenditure and cutting #interestrate. With or without an #epidemic, these policies are worth considering.
There is no need to link these aggregate policies with the epidemic.
Read 7 tweets
Lets talk about the #MonetaryPolicy Implications for #FinancialInnovation / #FinTech...
I am sure by this time we have all heard of the phenomenon known as #FinTech. Recently, I used the #GoogleTrends platform to ascertain the degree of search interest in the term "FinTech". The graphs depict a surge in interest from around 2014...
I took the #GoogleTrends analysis a bit further and determined where (geographically) interest in the search term #FinTech was most pronounced...
Read 13 tweets
Let us talk about the #SouthAfricanReserveBank & what we can expect from their #MonetaryPolicy in 2020...
The #SouthAfricanReserveBank #SARB #MonetaryPolicyCommittee #MPC will conclude its first meeting of 2020 tomorrow 16th January 2020...The #KeyPolicyRate, the #RepoRate is currently 6.5% and #Inflation (#CPI inflation) is within the Bank's 3%-6% target range, at 3.6%...
The #SARB #MPC will consider #domestic #regional & #global #economic / #macroeconomic developments in deciding on its policy stance. The SARB is an inflation targeting #CentralBank whose mandate is to ensure #Price & #Financial #Stability necessary to support economic #Growth...
Read 6 tweets
Recently, the global #interestrate has become the focus of market attention again, quoted CF40 member Peng Wensheng.
There are three perspectives for understanding low interest rates. The first is to analyze natural interest rates. Insufficient long-term demand will cause interest rates to fall.
The second is to analyze currency interest rates. The financial cycle leads to a downward trend in interest rates that is oriented towards stable economic cycle.
Read 7 tweets
Question——who should be the main driving force of the process of marketization of #interestrate? Should it be the #centralbank or market itself as a result of factors like financial disintermediation? By CF40 member Wu Ge, 1/6…
There is a natural connection between interest rate liberalization and financial disintermediation. Recently, the central bank took the lead in releasing the new LPR (Loan Prime Rate) mechanism. 2/6
Previously, it also launched a mechanism in which points are added to the MLF (Medium-term Lending Facility) rate to improve transparency for quoting. 3/6
Read 6 tweets
#US #InvertedYieldCurve & panic
On wed, #DowJones, #nasdaq & #SP500 saw more than 3% fall, highest in year so far
Reason? #10YearTreasuryYield < #2YearTreasuryYield, #spread being 0.04%, lowest since 2007
- Treasury notes are #USGovernment securities issued for 2, 3, 5 & 10 year
Starting with basics first.
1. #InterestRate & #BondPrices have #InverseRelationship, meaning if interest rises bond prices fall & vice versa
Why? eg. if currently #Coupon rate on a bond is 6% & int rate is also 6% & face value of bond is rs. 100. Meaning buyer of bond is willing to pay more or less complete face value of rs. 100
Read 19 tweets
2 key areas that Huang Yiping highlights in #China’s #market-oriented #reform:

1. #Interestrate liberalization
The government has been pushing #banks to lend more to private enterprises, while asking them to lower the lending rates, which can be very counterproductive.
As #SMEs are high-risk by nature, they should be charged with higher interest rates. What the government is pushing for is a mission impossible. Image
2. #Financial #innovation
Online #lending could possibly solve the problem. A good example is MYbank under #AntFinancial. They have 377 people in Hangzhou headquarter, but in one year they served 5 million customers and #SMEs relying on the mobile terminal and #bigdata analysis.
Read 4 tweets
When #stagnation and #inflation occur at the same time, the determination of #monetarypolicy is usually more difficult.
At this point, the inter-bank market #interestrate tends to be volatile in the short term, and its final trend still depends on the change of aggregate #demand after the #cost shock recedes.
Particularly, empirical research shows that #housing #price, rather than #exchangerate, has restricted the marginal adjustments of #monetary #policies in #China to a certain extent.

By Wu Ge:…
Read 3 tweets

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