Daily Brief Macro: Macro Watch - Everything Related to the Deposit Crisis Keeps Worsening Beneath the Hood and more

In today’s briefing:

Macro Watch – Everything Related to the Deposit Crisis Keeps Worsening Beneath the Hood
FSC to Reduce CFD Derivatives Transactions in Korea
The Week That Was in [email protected] – Sea Ltd Buoyant, Grab Delivering, and DXN IPO
China Recovery – Real Estate
Comment on Exchange Rate EUR/USD – March 31, 2023
Significant Looming Gyrations in US Banking Liquidity as Reserves Approach Key Threshold
CX Daily: Court Ruling Sets Off Debate About Bond Fraud Compensation

Macro Watch – Everything Related to the Deposit Crisis Keeps Worsening Beneath the Hood

Given a lack of an imminent economic crash risk, bond bears have been back in the driver’s seat.
No news is bond bearish news, which in turn is likely to exacerbate the already worsening root cause of the deposit/bank crisis.
We are on high alert for the ramifications of the price action in the USD.

Due to the recent crash in numerous Korean stocks related to the CFDs, FSC announced that it plans to restrict the amount of leverage related to CFD products.
CFDs will be considered as personal credit extensions and thus should be included in the credit limit of securities companies.
Given the propensity of retail investors to be net-long, the greater restriction on the credit limit of securities limit could add to further selling pressures on the Korean stock market.

The Week That Was in [email protected] is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
The past week so insights on Sea Ltd (SE US) and Grab Holdings (GRAB US) post results plus insights on Golden Energy & Resources, Penguin International, and DXN Holdings IPO.
There was also a macro Insight looking at post-election Thailand from Manu Bhaskaran plus an insight looking at the Vietnamese construction sector.

Until April, China A shares saw sustained Northbound Inflows.
In January 2023, foreign investors invested a record $100 billion in China A shares.
This was more than 2022, which was $90 billion. We have started to see some outflows in May, but this is yet to be a trend.

The EUR/USD exchange rate has moved upwards with significant fluctuations over the course of March 2023.
As it can be observed in the main graph (Graph 1), there was a period of fluctuations in the exchange rate but with a steady upward trend.
The exchange rate fluctuated significantly over the course of the month reaching a high of 1.0901 on March 30th.

Bank reserves have fallen since December 2021 towards the lowest comfortable threshold deemed by the Fed. Renewed Treasury borrowing will intensify the downward pressure in the coming months.
Lower debt issuance by Federal Home Loan Banks in the coming months will help to boost money market funds’ participation in the Reverse Repo Programme, thereby reducing bank reserves.
Rising stress in the repo market in September 2019 prompted the Fed to buy T-bills. The Fed could repeat its 2019 response, but this action would not constitute quantitative easing.

Bonds /: In Depth: Court ruling sets off debate about bond fraud compensation
Ukraine /: Chinese peace envoy meets Zelenskyy in Ukraine
Regulator /: China deploys former Everbright chairman to new financial commission

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