China: Keep The Faith
(3 min read)
My discussions with macro investors have recently centred around two questions. First, could the RMB extend its gains further? And second, could the worsening floods and issuance pressure lead to weakness in the bond market?
Stay Bullish RMB, Monetize High Vol.
In my last update on 5 June, I made a bullish case for RMB. I argued that, despite the lingering risks of trade tensions, RMB would benefit from policy divergence, USD weakness and US elections. Since then, USDCNY has fallen to 6.90. I expect this trend will continue over the next 3-6 months, though some consolidation is due around current levels.
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