August was characterised by receding US recession risk and the rise of the long-dated US Treasury Yields as economic growth stayed at or above trend and economic data continues to show resilient. Over the course of the month, the 30-year US Treasury yield has risen to a 17-year high of 4.456% while market continues to price the Fed Fund Terminal rate at around 5.42%. S&P 500 (SPX) and Nasdaq 100 (NDX) endured significant declines throughout August. As of the market’s close on August 26th, SPX and NDX were down -3.99% and -5.27% respectively. The key message extracted from Chair Powell’s closely observed speech at the Jackson Hole symposium was that the Federal Reserve aims to maintain a restrictive policy stance until they have a solid belief that inflation is progressing in a sustainable manner toward their desired target. Nevertheless, Powell also emphasized the Fed’s cautious approach, indicating the possibility of maintaining the current stance through September.[i]

Meanwhile in China, optimism from the July Politburo meeting quickly faded, leaving Chinese asset sentiment fragile. Global investors notably divested from China’s blue-chip stocks in an unprecedented selling streak from 7 Aug – 22 Aug 23. This exodus comes amid concerns of a prolonged housing downturn, increasing the risk of wider financial repercussions. [ii]Consequently, China’s equity benchmarks have been among the weakest performers on the global stage this month. As of the market close on August 26th, the CSI 300 and HSI indices were down by -6.94% and -9.71%, respectively.

Source:

[i] Read Powell’s Full Speech From Jackson Hole Symposium – Bloomberg
[ii] Global funds abandon China blue chips in US$9.3 billion sell-off, Global Enterprise – THE BUSINESS TIMES

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