China Cuts, FOMC Day, Indi/Paki War Heats Up

Subscriber Tracker Updates

Last night China once again cut rates.

The Peoples Bank of China (PBOC) cut 50bp from the reserve requirement ratio, its benchmark interest rate, and announced a stimulus package of 1tn yuan or $138Bn USD. We continue to see China doing all it can to salvage its failing economy, we also read that China’s population is greatly overstated and if so, then per capita stats are greatly skewed. China is a house of cards and no doubt accelerating its odds of a major depression, that is if it is not already in one.

The ongoing US/China tariffs situation where China is facing a 145% tariff on its exports to the US. The US is meeting China in Switzerland this weekend in hopes of resolving some of the trade imbalance and work toward an amicable solution.

We also saw last night India and Pakistan continue to go hot on the war front as India struck multiple targets. The outcome of these actions are yet to truly make their way through financial markets. We suspect the US would have to intervene here before this gets too out of control, but no word on that yet. Here is the X post that Zerohedge posted:

As far as the US today, (its actually Thursday the auction) we have more supply coming a fresh US Govt 30y auction and expectations may not be as high as yesterday’s 10Y which saw excellent demand and a stop thru indicating investors were willing to take down supply at current yield levels. The 30Y is a different animal its reception may not be as welcomed considering the duration as we have noticed the belly of the US govt yield curve (3s/5s/7s and 10s) have been seen greater demand than the long end. However we believe the auction is overshadowed by the anticipation of the Federal Reserves rate announcement and the post decision Powell pressor. We don’t expect much out of the pressor as none of the participants ask any real questions of substance, just fluff. We called the WSJs Timiraos on this soft-balling and he promptly blocked us on X, typical of a spineless, weak main stream media tool.

Anyway, with no cut expected today and with other global central banks cutting and providing stimulus like China and Switzerland, the next path has been laid. We expect the FOMC to cut rates when we start to see NFPayroll data come in negative. In fact they may emergency cut once they see that, so we will keep you posted!

Taking a look at the US Govt 10Y yield chart, we can see 4.37% once again acted as upper end resistance:

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