Beijing Targets to Suppress Bubbles in Metals, Property, and Crypto

China sees challenge in maintaining order in the financial markets as money floods into assets from housing to commoditiesand stocks.

This month alone, the government vowed to revive the idea of property tax, supervise hikes in mortgage rates in some cities, tackle price speculation is in metals, banned the mining of cryptocurrencies and played down calls for a stronger yuan within the central bank.

Authorities have no tolerance for overheating in risk assets as monetary policy remains relatively loose to support the economic recovery from the pandemic.

According tothe head of investment strategy at JPMorgan Private Bank, Alex Wolf said China is now focused on ensuring financial stability, in a targeted manner, through the use of strong rhetoric and minor policy adjustments. 

Internationally, central banks in the US and Europe have expressed views on the temporary rise in consumer prices, but are committed to keeping rates low in the foreseeable future.

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China’s bond marketing isn’t pricing in higher borrowing costs in the near term as the 10-year yield in sovereign debt has fallen to an almost nine-month low near 3.1%. However, this figure of return still presents a decent return to global investors, which resulted in inflows added to the pool of domestic funds.

China has so far seen some success with its targeted approach. In particular, commodities futures have fallen from their recent records and cryptocurrencies have plunged roughly 30% this month trigger by Elon Musk’s tweet about the environmental costs of digital assets. 

Key events this week (Economic Calendar):

  • US initial jobless claims, GDP (Thursday)

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