The 10-year real yield, adjusted for inflation, continues to climb. It is trading close to 2% at 1.96%. The last time real yields were at these levels was back in June 2009. This post-inflation yield will be appealing to a significant number of investors, adding increased rivalry for stocks, particularly stocks with elevated valuations. The daily candles in Chart 1 show that the 10-year real yield has charted a higher…

Bitcoin dropped markedly late in the trading day yesterday and is trading around $26,500. For the current week, the cryptocurrency is down 9.65%. The drop followed an article in The Wall Street Journal that reported that SpaceX wrote down its bitcoin holdings to the value of $373m in 2022 and 2021 and has sold its holdings.

The Peoples Bank of China has stepped up efforts to defend the renminbi. The Chinese currency has been declining off the back of poor economic data and woes in its property sector. This includes a weakening in exports and fragile consumer confidence.

Bitcoin has declined by about 1% over the last two days, to trade around $28,500. This comes after two weeks of muted price action. The market is starting to appreciate that rates may remain “higher for longer” and this is weighing on the cryptocurrency. Bitcoin’s volatility is still low, but the recent price movement is showing signs of life, albeit to the downside. The question is if the downside movement…

The Federal Open Market Committee minutes for the July meeting were released yesterday and indicate that officials are still concerned about inflation. The minutes read that “most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy.”

A big Chinese trust company, Zhongrong International Trust Co., is causing concerns because they have not been making payments on their investments lately. This company is typically involved in real estate and has been having trouble with payments on many of their investment products. This, along with home prices going down, is making people worried that the ongoing property crisis in China is making the economy's slow growth even worse.

UK headline CPI came in at 6.8% y/y, which was lower than the previous print of 7.9% y/y. However, core CPI is 6.9% y/y, the same as the prior month. Inflation is down from current cycle highs but is still far above the Bank of England’s (BoE) target of 2%.

Real yields have an effect on the USDOLLAR, Gold and Risk Indexes.

The UK’s average earnings index 3m/y (including bonuses) printed at 8.2%. This is higher than the previous 7.2% and higher than the forecast of 7.3%. In fact, regular pay grew by 7.8%, which is the highest rate since records began in 2001. This suggests another rate hike by the BoE in September is a distinct possibility.

China unexpectedly cut the medium-term lending facility (MLF) by 15bps to 2.5%. This is the biggest cut since 2020. This action is to provide support to an economy that is currently grappling with renewed challenges stemming from a deteriorating property market and sluggish consumer expenditure.

USDJPY has hit a new high for 2023, trading near 145.15. Market participants are now looking for potential Japanese government intervention to support the yen. The dollar has been bolstered by higher US yields and concerns over the Chinese property market.