Thread by @Trinhnomics

Morning!!! EUR moved downward on stimulus expectations! Dollar 💵 king 🤴! The APAC region is watching:

China stealth move to lower rates (people watching OMO too not just lending), Korea super data tom (1st 20-day trade) Fed, Indonesia monetary (fiscal budget was out last wk)

So today China CNY fix key but more key is LPR & also whether other rates will get pushed downward too. All have implications for China itself, the rest of the Asia region, & of course the world.

Q: What happens to FX when rates move lower? 🧐🧐🧐

Busy morning! RBA minutes at 930 after China data. AUD has been trending back to the level of the day where RBNZ slashed rates by 50bps. Not a coincidence. Taiwan export orders out today & expectations are WORSE of -5.9% for July. But we all know that Korea is really the key data

Let's look at foreign ownership of UST in June: it is totally up (+97.2bn). Note that some of this is due to valuation impact but still!

Japan 🇯🇵overtook China 🇨🇳 as the largest holder of UST! Everyone is buying thanks to NIRP. Btw, if u add it up, Europe 28 ownership BIGGEST!!

Repeat after me: NIRP loves PIRP! The US is totally PIRP (even if the Fed cuts rates by another 50bps by end 2019, still pretty PIRP compared to these NIRPers). Hence, King USD 🙇🏻‍♀️🙇🏻‍♀️🙇🏻‍♀️.

As China reduces purchases, the EU is buying more! So is Japan! So is the rest of the world!

NIRP 😘💜 PIRP . Yep, true story - the data shows!!! Opposites attract! Totally complementary. Totally natural & u know what that means?

The PIRPers of EM Asia should be doing okay. We're talking about current account deficit guys like India, Indonesia, the Philippines, etc👏🏻👏🏻

China 1yr LPR is 4.25%, which is 6bps lower 📉 (was 4.31% before) & so moving lower slowly here. Treading very gently here. Note that this is a rate set by 18banks w/ a spread over 3.3%1yr MLF.

RBA is saying that, "reasonable to expect extended period of low interest rates."