Adding CORE for Thematic & Fundamental Reasons (Core Strategy Rebalance)
PBOC One-Upping the Fed
This week, China’s central bank initiated what we believe are the first steps in a broader effort to stimulate the economy, which is struggling to meet its annual growth target of around 5%. These new measures are aimed at reviving economic activity and restoring confidence, especially in the real estate and equity markets, both of which are facing significant challenges.
The People’s Bank of China (PBOC) has introduced several initiatives to address these concerns:
Lowering short-term interest rates: The PBOC reduced its seven-day reverse repurchase rate from 1.7% to 1.5%, providing a short-term liquidity boost to the financial system. On Wednesday, they also announced that they would be reducing the medium-term loan facility (1-year policy rate) to 2% from 2.3%, the largest cut since this tool was enacted in 2016. Mortgage rate cuts: In response to the prolonged real estate downturn, mortgage rates on existing housing loans will be reduced, aimed at easing pressure on the housing sector and stimulating home purchases. Reserve requirement ratio (RRR) cut: By lowering the RRR by 0.5 percentage points, banks will be required to hold less in reserves, freeing up liquidity to encourage lending and investment. Stock market support: A ne...Reports you may have missed
Market Lacks Convincing Signs of Market Froth, Major Demand Side Catalyst for CORE (Core Strategy Rebalance)
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