On the first trading day of 2024, the offshore exchange rate of the yuan reached a peak of 711, but then there was a wave of **, with a maximum drawdown of 400 points. This shows that the road to renminbi appreciation has not been easy. At the same time, the sudden collapse of the US bond market was a surprise. This week, the US will release employment data and the minutes of last month's Federal Reserve meeting, which will help the outside world analyze the Fed's future monetary policy. However, against the backdrop of these concerns, Treasury yields across all tenors are broad**, suggesting increasing selling pressure. In particular, the yield on the 10-year Treasury note has exceeded 39%, up to 3936%, while the yield on the 30-year Treasury note reached 4075%。Despite the short-lived nature of U.S. Treasuries, they failed to restore investor confidence, and holders sold off. In fact, in the last two months of the Federal Reserve meeting, no interest rate adjustments have been made, so the ** or ** of US bonds is mainly a psychological game in the market. Currently, there is less than a 10% chance of a rate cut in January, while the Fed is widely expected to cut rates in March. In addition, only a 21% probability that the rate will remain unchanged in March is expected. Expectations of a rate cut by the Fed are getting stronger, which has had a big impact on the dollar. The U.S. dollar index has already appeared** despite the fact that the rate cut has not yet been implemented, so under the influence of the expectation of a rate cut, the U.S. dollar index may go further**. However, once the Fed decides to cut interest rates, the dollar index is likely to be relatively stable or even **. The U.S. dollar exchange rate is mainly supported by interest rates, while the renminbi exchange rate is mainly supported by the continued improvement of the economy.
It is not surprising that the renminbi's exchange rate has fluctuated. At present, the global economy is facing many uncertainties, including US-China economic and trade frictions, and the slowdown in global economic growth. All these factors have a direct or indirect impact on the trend of the RMB. In addition, the appreciation of the renminbi also needs to take into account the domestic economic fundamentals. Although China's economy has achieved stable and high growth in the past few years, it still faces some challenges, such as structural adjustment and financial risks. Therefore, the exchange rate of the renminbi will still face certain fluctuations in the coming period.
The increased uncertainty in the U.S. Treasury market is mainly due to investors' uncertain expectations for the future monetary policy of the Federal Reserve. Expectations for a Fed rate cut are getting stronger, which puts more pressure on the dollar. Of course, commodities, the international situation and other factors will also have an impact on the dollar. For foreign investors, there is an exchange rate risk in holding U.S. bonds, while for U.S. domestic funds, they face the risk of the bonds themselves. At present, the proportion of U.S. bonds held by overseas investors has fallen to less than 1 4, and more than 70% of U.S. bonds are purchased by domestic funds, including hedges**, the Federal Reserve, all levels** and ordinary households. This holding structure is troubling for the US**, as the issuance of US bonds is meant to attract overseas buyers. However, due to a series of interest rate hikes by the Federal Reserve, overseas funds have been withdrawn from the U.S. bond market, and domestic funds have taken over. If the U.S. bond market crashes, who will pay in the end?
In addition to external factors, the exchange rate fluctuations of the renminbi are also supported by the domestic economy. The recently released Caixin Purchasing Managers' Index (PMI) once again exceeded 50 and increased by 01 percentage point, which further indicates that the momentum of China's economic expansion is gradually obvious. At the same time, various economic data also show that consumption has contributed more than 80% of gross domestic product (GDP) growth, which means that China's economic power engine is undergoing positive changes. These positive economic indicators indicate that the RMB exchange rate is expected to continue to appreciate. Of course, there will still be some fluctuations along the way.
At the same time, with the US dollar **, the risk of US debt has increased further. For foreign investors, holding U.S. bonds not only faces the risks of the bonds themselves, but also bears exchange rate losses. For U.S. domestic funds, although there is no exchange rate loss, the risk of the bond itself cannot be ignored. At present, more than 70% of the major buyers of U.S. bonds are domestic funds, including hedges**, the Federal Reserve, and all levels** and ordinary households. This holding structure has left the authorities helpless, after all, they originally wanted to sell US bonds to overseas investors as much as possible. However, the Fed's series of interest rate hikes have led to a steady stream of overseas funds selling US bonds, while domestic funds have continued to take over. In the face of this situation, if the U.S. bond market collapses, it will bring huge challenges to the United States**. In the current situation, in fact, both overseas investors and domestic funds in the United States are facing the risk and pressure of holding U.S. bonds.
Judging from the current situation, the RMB exchange rate is expected to continue to maintain a good trend. The continued improvement of China's economy has provided support for the renminbi, and various economic indicators show good economic growth momentum. At the same time, the US dollar is likely to continue to ** under the influence of interest rate cut expectations, which will further push the exchange rate of the yuan higher. However, fluctuations in the RMB exchange rate remain inevitable for some time to come. The global economic instability still exists, and the international situation and the volatility of the global financial market will have an impact on the RMB exchange rate.
On the other hand, risks in the U.S. bond market are under further pressure. Currently, more than 70% of U.S. domestic funds are owned, which means that the U.S. is at greater risk when overseas funds sell off U.S. bonds. In order to stabilize the U.S. bond market, the relevant authorities need to take a series of measures to attract overseas investors and ensure market stability. At the same time, it is also necessary to strengthen market supervision and guard against financial risks. For investors, it is necessary to choose investment varieties more carefully and diversify risks.
In short, the competition between the renminbi and U.S. bonds will further intensify in the future. The renminbi has begun to show its strong potential, and the challenges facing the U.S. bond market are becoming apparent. It is difficult to determine who will ultimately win the currency war in the future, which will be determined by the development of the economic and financial environment. Further observation and analysis of changes in the global economic situation, as well as the monetary policies and market performance of various countries, are needed. Investors and market participants should pay close attention to the development of relevant data and events in order to make more accurate judgments and decisions.