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Speaker 1: Let's get now to our guests. Maddie juan As, head

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Speaker 1: of Markets Corporate Investment Banking, a pack at Wells Fargo

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Speaker 1: on the line for us from Hong Kong. So, I

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Speaker 1: mean we're looking at stokes rising bond yields falling ahead

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Speaker 1: of Jackson Hole. As I mentioned at the start of

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Speaker 1: the show, we've heard from a number of FED speakers

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Speaker 1: as well about how much the Fed will need to

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Speaker 1: keep hiking rates. Just how hawcus do you expect we're

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Speaker 1: going to hear from Jake We're going to see from

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Speaker 1: j Pal I should say, hi, good morning. I I

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Speaker 1: I actually don't really expect much of a solid guidiance

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Speaker 1: from Jackson Hole tonight in terms of like how much

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Speaker 1: we're gonna hike they're gonna hide in September, or where

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Speaker 1: policy rates we're going to be in in the cycle.

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Speaker 1: I think you would probably hear a very general rhetoric

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Speaker 1: from the fact that definitely a policy rate need to

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Speaker 1: go higher, they would do whatever it takes, you know,

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Speaker 1: to combat inflation. The reason being is, I think the

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Speaker 1: FAT is definitely looking in into the monetary policy in

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Speaker 1: a more data driven way, and and and we will

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Speaker 1: want to get job data on the second of September,

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Speaker 1: we're gonna get like the August CBI data, which is

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Speaker 1: a very key data to watch, you know, before the

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Speaker 1: September effort m C so, I think they won't leave

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Speaker 1: much of a significant guidiance tonight. But if that's the case,

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Speaker 1: I think the market will continue to see a bit

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Speaker 1: of a relief rally, you know, on the back of that.

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Speaker 1: The key of course is running in these inflationary pressures

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Speaker 1: and trying to avoid a recession. What are your views though,

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Speaker 1: on the likelihood that we could see some kind of

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Speaker 1: big downturn. Yeah, so definitely we have been seeing uh

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Speaker 1: evidence that inflation is peaking here from the July data.

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Speaker 1: Prices actually decline and much broader in nature, like beyond

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Speaker 1: the commodity prices in the In the July CPI data,

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Speaker 1: we're also seeing a slower um you know, producer us

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Speaker 1: producer price inflation in July, which is a pretty good

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Speaker 1: sign that inflation is speaking. But having said that, right,

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Speaker 1: even you see a you know, like a softer August

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Speaker 1: inflation data, we still think that the level of inflation

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Speaker 1: here is uncomfortably high. So I think the question is

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Speaker 1: not whether you know, we are seeing a trend of

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Speaker 1: inflation is going lower or inflation is peaking here. But

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Speaker 1: rather than like, you know, what level of inflation we're

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Speaker 1: seeing at the end of the year, we still think

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Speaker 1: that inflation is sticky. I think the base case we

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Speaker 1: are forecasting that, like you know, the core inflation is

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Speaker 1: still about six percent at the year end, headline inflation

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Speaker 1: is still about seven percent in the year and so um,

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Speaker 1: inflation is going to be sticky here. Um, you know

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Speaker 1: for the rest of the year. You touched on on

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Speaker 1: the jobs numbers. Two, I mean, how important is the

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Speaker 1: labor market when we look at what we're going to

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Speaker 1: hear from J Pow when you've got the likes of

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Speaker 1: long COVID of course really affecting the market, and the

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Speaker 1: fact that these inflationary pressures are very much hitting lower

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Speaker 1: income consumers. Right, So I think that the job data

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Speaker 1: is definitely very very important data to watch, especially on

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Speaker 1: the wage growth. I think when you when when I

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Speaker 1: mentioned that inflation is sticky, one of the reasons, I

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Speaker 1: mean that there's a couple of reasons on the back

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Speaker 1: of that, right, you know, some of the global supply

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Speaker 1: chain issue, but wage global growth is also another um,

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Speaker 1: a reason here, you know, for inflation continue to be sticky. Um.

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Speaker 1: You know when you look at like some of the data,

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Speaker 1: like you know, wage growth, you know, before the pandemic

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Speaker 1: or after the pandemic, you know, and even though like

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Speaker 1: you know a lot of job participation of job coming

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Speaker 1: back to us, we can still see that wage growth

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Speaker 1: is quite sticky. You know at this point, Um, I

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Speaker 1: think it's like you know, a lot of this issue

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Speaker 1: that you know causing sticky inflation is very structural changes.

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Speaker 1: So wage growth is definitely a very important data point

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Speaker 1: to watch, you know from here. Um uh. In terms

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Speaker 1: of the data, I want to get your views as

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Speaker 1: well on I guess what we're saying with the bification

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Speaker 1: of of China stimulus and the aggressive tightening from the Fed.

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Speaker 1: But just a very quick question in terms of after

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Speaker 1: we're out of Jacksonhole, what assets outperformed next week? I think,

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Speaker 1: you know, as what the base case scenario that we're

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Speaker 1: looking at that not much of a guidians or you know,

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Speaker 1: a fat stick to the usual rhetoric that the inflation. Um,

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Speaker 1: they're gonna continue to do whatever it takes to inflation.

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Speaker 1: I think market will continue to have a bit of

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Speaker 1: a short term relief rally in stock and and also

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Speaker 1: UM in the front and part of the curve, especially

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Speaker 1: on the treasury, you can see that, Like I think

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Speaker 1: this week there has been quite a short positions you know,

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Speaker 1: in the in the front end part of the curve.

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Speaker 1: I wanted to pick up on one of the stories

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Speaker 1: Brian was talking about there with the Securities Journal in

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Speaker 1: China reporting that making good use of local government special

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Speaker 1: bond quota would help drive investment and economic growth towards

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Speaker 1: the end of the year. What kind of a pickup

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Speaker 1: could we see in Chinese growth if we're continuing to

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Speaker 1: see the likes of you know, a hundred and forty

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Speaker 1: six million dollars pumped into this economy, I actually see,

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Speaker 1: you know, it will be a little bit of a

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Speaker 1: limited defect. I think what UM will really build confidence

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Speaker 1: to the China market is really to see a clear

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Speaker 1: um you know, clarity in terms of the serial COVID

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Speaker 1: polyssies UM as well as well as you know, some

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Speaker 1: of the really targeted measures you know to handle the

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Speaker 1: property market situation and some of the leverage you know

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Speaker 1: issues you know that that's in China. So I would

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Speaker 1: say that I would see. I think it would see

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Speaker 1: limited you know, um impact you know to the overa

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Speaker 1: China economic growth from here on that How attractive is

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Speaker 1: the tech space at the moment. We saw Chinese stocks

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Speaker 1: in the U S surge on those delisting talks and

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Speaker 1: tech stocks in Hong Kong having the best day in

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Speaker 1: nearly four months. But this is a sector that has

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Speaker 1: been battered, very heavily been battered since those highs we

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Speaker 1: saw in early Yeah. Again, sorry, like I I don't

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Speaker 1: have much common on the text you know, uh topic here,

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Speaker 1: but yet on the China market, on the China markets

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Speaker 1: you're seeing, okay, a little bit of concern still when

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Speaker 1: we look at the I guess divergence between what you're

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Speaker 1: seeing with stimulus from China and then of course this

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Speaker 1: aggressive tightening from the FED. One of our reporters have said,

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Speaker 1: this creates a potential goldilock scenario for a handful of

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Speaker 1: exported countries. I know you've been looking quite closely at

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Speaker 1: the commodity space. Where do you see some upside in

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Speaker 1: some of these exported countries? Yeah, so definitely, I think

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Speaker 1: I think, you know, there there has been a bit

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Speaker 1: of a change in terms of you know, commodity. I think,

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Speaker 1: like commodity actually it is quite an important driver you know,

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Speaker 1: on the ethics market here, especially you know, when US

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Speaker 1: is continued to ram up the export of Crewe oil

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Speaker 1: and gas you know in recently um, which actually you know,

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Speaker 1: gives us a bit of a call that like you know,

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Speaker 1: dollar strength will be continuing to the rest of the year,

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Speaker 1: you know, compare um you know, to to to the

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Speaker 1: rest of the world here. So um, I think another

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Speaker 1: comment about commodity is like I think there's still a

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Speaker 1: bit of room to grow to run for commodity. We

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Speaker 1: also look into like commodity prices tend to decline you

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Speaker 1: know after you know, US economy go into recession, which

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Speaker 1: is the base case for US into like second half

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Speaker 1: of next year. So I think like between now and then,

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Speaker 1: commodity still you know, have a bit of a room

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Speaker 1: to run from here. When do we say peg dollar.

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Speaker 1: I think we're going to see Pekin dollar at the

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Speaker 1: end of this year again, you know, a couple of reasons,

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Speaker 1: you know, besides the terms of trade and the commodity

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Speaker 1: prices that I mentioned here, where US continue to ram

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Speaker 1: up the export you know of commodity here compared to say,

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Speaker 1: UK and Europe our net commodity importer. And I also

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Speaker 1: still think that like US has a little bit more

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Speaker 1: room to tighten or to hight rate compare you know,

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Speaker 1: to Europe and UK from here, and that also drive

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Speaker 1: that UH dollar strengthen and to the end of the year.

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Speaker 1: But going into two thousand twenty three, I think, you know,

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Speaker 1: a dollar probably will enter into a cyclical weakness against

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Speaker 1: most of the currencies, given that US will probably sleep

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Speaker 1: into the recession the second half of the year and

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Speaker 1: have to adwind some of the great heights. So Mandy,

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Speaker 1: just finally just a little bit more of your thoughts

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Speaker 1: on you're saying being cautious with risk assets, but you

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Speaker 1: quite like fixed income. That's correct, I think compare. I

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Speaker 1: think for the rest of the year it will be

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Speaker 1: still a very tough and challenging year for risk asset

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Speaker 1: to perform. UM definitely you continue to rise a little

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Speaker 1: bit into the end of the year, but I think

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Speaker 1: UM dollar continued to stay strong, and dollar fixed income

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Speaker 1: in the front end short duration seems it's the best pick,

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Speaker 1: you know for now, Mandy, thank you so much for

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Speaker 1: your time. Mandy One, Head of Markets Corporate Investment banking

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Speaker 1: apack at Wells Fargo, joining us from Hong Kong