My blog

Tag: Latest News

  • Asian Stocks Dip After CPI Data While Tech Gains: Markets Wrap

    Asian Stocks Dip After CPI Data While Tech Gains: Markets Wrap

    TOKYO/HONG KONG: Asian stock markets were mixed Thursday as investors tried to digest the latest US inflation data and navigate shifting trade policies while technology companies pushed higher on Wall Street.

    Particularly in the semiconductor sector, for pockets of optimism. Explore the latest market movements as Asian stocks dip after CPI data while tech gains: markets wrap, while tech stocks gain traction. Get the full analysis in our market.

    CPI Data Takes Wind Out of Rate Cut Bets, Pharma’s Dropание

    By and large, Asian shares inched down as traders adjusted the degree of interest rate cuts that the Federal Reserve would make. The US Consumer Price Index (CPI) minus volatile food and energy categories rose 0.2% from May – a modest figure, but one that provided a sign that some US companies are raising their prices to counter cost pressures due to new tariffs.

    “While any tariff-induced jump to inflation is expected to be temporary, more higher tariffs being imposed means the Fed should still refrain from raising interest rates for a few months at least,” said Seema Shah at Principal Asset Management.

    The cautious outlook encouraged traders to chip away at the odds of multiple Fed rate cuts this year, with the likelihood of a September cut now barely better than a coin flip, less than a 20% chance of two rate cuts this year. These revised policy bets typically bear down on riskier assets in Asia.

    In a similar sector-specific drag, Asian pharma stocks fell following renewed threats by US President Donald Trump to impose tariffs on pharmaceuticals by the end of the month.

    (Tech Outperforms as Chip Export Expectation Lifts Seoul)

    Tech stocks across Asia, in turn, bucked the broader market decline, supported by favourable developments in the semiconductor sector. The Hang Seng Index in Hong Kong added 0.3 per cent, largely on the back of tech companies.

    One big catalyst was word that US chip behemoth NVIDIA has received assurances from the US government that it will be able to resume exporting its H20 artificial intelligence accelerator chips to China.

    This radical shift from an earlier position held by the Trump administration is considered quite bullish for the AI semiconductor supply chain and general US-China relations, especially when the two sides are negotiating levels of tariff amounts, which is a very positive development.

    Taiwan Semiconductor Manufacturing Co. (TSMC), a critical NVIDIA partner and one of the largest global manufacturers of chips, TSMC, TSMC, Copper Tubes, TYO, 2330 c1, rose as much as 1.8% in Taipei after a media report suggested the company intends to build a second chip plant in Japan to diversify its production, including for chips used in the automotive sector.

    South Korean tech companies including Samsung Electronics (005930.KS) and SK hynix (000660.KS) are also riding the wave, as Samsung Electronics ended 1.57% higher on Monday, a sign of broader optimism across the semiconductor sector.

    Regional Performance Snapshot

    Japan’s Topix was little changed as the Nikkei 225 edged 0.58% higher on July 15, supported by tech advances amid broader market wariness.

    • Australia’s S&P/ASX 200 lost 0.8 per cent, with the broader index weighed down by inflation worries.
    • Hong Kong’s Hang Seng index rose 0.3 per cent, boosted by its tech component. Chinese mainland markets, including the Shanghai Composite, fell slightly, down 0.1%.
    • South Korea’s Kospi fell 0.73% as broader worries about the economy overwhelmed technology sector optimism for the overall index.

    Meanwhile the Japanese yen was 0.2% weaker versus the dollar, close to levels not seen since April, as the market considered the possibility of divergent monetary policy stances in the US and Japan. Gold, another traditional safe haven, nudged higher.

    As global financial markets grapple with the prospect of inflation, interest rate assumptions and the changing world of trade, the gap between general market sentiment and the success of AI-powered tech stocks illustrates the themes dominating investment strategy decisions in mid-2025.

  • US Tariffs Projected to Slow Global Economy and Insurance Premium Growth: Swiss Re

    US Tariffs Projected to Slow Global Economy and Insurance Premium Growth: Swiss Re

    Swiss Re Institute predicts that a potential impact of rising US tariff policy is slower global economic growth. The reinsurance colossus’ most recent “World Insurance sigma” report, published July 9, 2025 says these protectionist steps will not only hinder global GDP expansion but will also inhibit insurance premium growth internationally.

    Explore how US tariffs are set to impact the global economy and insurance premium growth, as analyzed by Swiss Re. Stay informed on key economic trends.

    Tariffs to Trigger “Stagflationary Shock”

    The global average rate (real GDP growth) is expected to slow to 2.3% in 2025 and 2.4% in 2026, having stood at 2.8% in 2024. This slowdown has been primarily caused by the widening US tariff policy which is causing a ‘stagflationary shock’ to the US, and by extension the broader global economy, and is designed to obliterate policy uncertainty worldwide, the report states.

    Jérôme Haegeli, Swiss Re’s Group Chief Economist, pointed to the short-term effect. “US consumers will be the most affected by US’ tariff policy and cut their consumption because of increased prices. This will in turn bear down on US growth which is largely driven by household consumption.” Swiss Re expects a slowdown in US GDP growth to just 1.5% in 2025 after 2.8% in 2024.

    “Additional tariffs would lead to structurally higher inflation in the United States” as supply chains become less efficient and domestic industries face reduced competition from other countries, the report said. This mix of weaker growth and accelerating prices creates a thorny new world for businesses and consumers.

    Insurance Premium Growth to Halve

    There’s to be a ripple effect from a lightened global growth and increased uncertainty, and the insurance sector like no other will suffer. Global insurance premium development will slow down considerably to 2% in 2025, about half of the 5.2% seen in 2024, according to projections by the Swiss Re Institute. In 2026, a low partial recovery to 2.3% is expected.

    Premium growth down in both life and non-life segments:

    Nonlife growth of premiums is forecast to fall to 2.6% in 2025 from 4.7% in 2024 as competition in personal lines and softening market in some commercial lines.

    The pace of growth in life insurance, in particular, will cool even more sharply, with premiums rising 1% in 2025, down from a 6.1% increase in 2024 — higher interest rates are set to moderate.

    US tariff policy is another step toward increasing market fragmentation longer-term, which would decrease insurance affordability and availability, and thereby global risk resilience, Haegeli cautioned.

    Trade barriers potentially leading to higher claims costs for insurers and supply chain disruptions, and cross-border flow of capital restrictions on reinsurers that may lead to capital allocation inefficiencies and higher capital costs and, ultimately, higher insurance pricing, are cited in the report.

    Uneven Impacts and Emerging Opportunities

    While the tone is in general cautious, the report states that the impact of tariffs on the insurance sector is likely to depend on geographic regions and lines of business.

    • US Motor Physical Damage This insurance sector is anticipated to bear the brunt of the tariff rise with auto parts and new/used cars prices surging and hence higher claims severity. Swiss Re predicts US motor damage repair and replacement costs will rise by 3.8% in 2025.
    • Our commercial property and homeowner and engineering lines in the US could also experience an increase in claims severity coming from higher costs for the intermediate goods, machinery, and commodities.
    • Tariffs outside the US are usually thought to be more disinflationary and could reduce claims pressure.
    • But the added uncertainty and economic disruption could also present opportunities, and credit and surety insurance that guard against economic disruption might be in higher demand. Alives could affect marine insurance as well, given changes to trade routes and supply chain realignments.

    Notwithstanding the decline in premium growth, Swiss Re says that the overall profitability position of the global insurance industry remains robust, benefiting principally from ongoing investment income gains.

    Yet the report is a stark reminder of how international trade policies and protectionism can have such widespread economic implications for wider global growth and important sectors, such as insurance.

  • Challenger to FICO Credit Scores Gets Green Light for Use in Mortgages

    Challenger to FICO Credit Scores Gets Green Light for Use in Mortgages

    There’s a shake-up occurring in the U.S. mortgage market, and it’s regarding something you might not think about very often — credit scores. A large portion of home loans are being paid with money from investors.

    Described by the Federal Housing Finance Agency (FHFA) on July 8, 2025, and supported by the European Parliament on July 10, 2025, the landmark decision looks to spur competition, lower costs for consumers and push homeownership opportunities to millions of Americans.

    The implications of a new credit score alternative gaining approval for mortgages. Learn how this challenger to FICO could benefit borrowers.

    Breaking FICO’s Monopoly

    FICO (FICO) scores have long been the gold standard for home mortgages bought and sold by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which back most home loans in the US. With the acceptance of VantageScore 4.0, the monopoly to be the only credit score in town has been shattered, welcoming the beginning of a new era of competition in the credit scoring environment.

    FHFA director William J. Pulte (Bill Pulte) made this announcement on social media, writing in a post on his official page that “Effective immediately,” lenders working with Fannie Mae and Freddie Mac can opt to use VantageScore 4.0. He stressed that this action is in line with President Donald Trump’s “landslide mandate to decrease costs” and raise competition.

    What VantageScore 4.0 Offers

    VantageScore 4.0, created by the three major credit bureaus (Equifax, Experian, and TransUnion), includes some important changes that should amplify the number of people benefiting from them:

    • Inclusion for “Thin Files”: One of the biggest benefits of VantageScore 4.0 is that it can score more consumers, especially people with little credit history, or “thin files”. It does so by including additional data points like rental payments, utilities, and telecom payments in the mix. What that means is that timely payments for these vital services can now be used to create or enhance a borrower’s credit profile for a mortgage. It’s a game-changer for people who don’t have traditional plastic credit cards or long loan histories.
    • Trended Data Analysis: Instead of providing a “snapshot” of credit at a moment in time, like old FICO models, VantageScore 4.0 uses “trended data”. This lets lenders view trends in a consumer’s financial planning over time, including whether credit card balances are being reduced consistently or minimum payments are made most of the time. This “video” of credit history has the potential to paint a much richer risk assessment.
    • Potential Cost Reductions: Introducing competition for the purchase of credit scores likely will reduce licensing fees for credit scores, lowering costs for lenders and potentially benefiting consumers with lower origination fees or interest rates.

    Impact on Homebuyers and Lenders

    The immediate impact is significant. VantageScore also says that its use would help an additional 4.7 million potential homebuyers, including first-time buyers, people of colour and those with an income on the low end of the scale, who cannot get a mortgage using scores supplied by the three national credit bureaus.

    For lenders, it means added flexibility and possibly less expensive access to credit reports, as the tri-merge (three-bureau) infrastructure is staying in place, making for a simpler move over. The move is being widely cheered by housing advocates and industry participants like the National Association of Realtors (NAR) for putting more credit options in the hands of consumers and burning off some sluggish competition.

    But some experts warn that lenders could still take a more cautionary approach with borrowers who don’t have a traditional credit history, perhaps leading to slightly wider interest rates in today’s market. But certainly, this is a big step toward modernizing the U.S. mortgage market, making homeownership more accessible for a wider swathe of the population.

    The FHFA’s move implements the 2018 Credit Score Competition Act — signed into law by then-President Trump — delivering on a long-time goal of modernizing the credit scoring system.

  • Japan bond yields hit multi-decade high as fiscal fears mount ahead of election

    Japan bond yields hit multi-decade high as fiscal fears mount ahead of election

    JGB yields have climbed to multi-decade geographical peaks, with the 10-year benchmark yielding more than 1.595% on Tuesday, July 15th, 2025, a level not seen since just before Halloween, October 2008.

    Japan’s bond yields reach multi-decade highs amid rising fiscal concerns ahead of the upcoming election. Discover the implications for investors and the economy.

    The spike in yields, especially on the far end of the curve, is a reflection of growing investor concern over Japan’s fiscal state and the prospects for additional government spending as preparation for the pivotal Upper House election on Sunday, July 20, heightens.

    Record Highs and Market Instability

    The 30-year JGB yield, a bellwether for long-term fiscal health, surged to an all-time 3.195% on Tuesday, and the 20-year yield rose to 2.65%, its highest since November 1999.

    The rapid movement reflects rising strains in a Japanese government bond market that has been unusually stable in the past, anchored by the BoJ’s ultra-accommodative monetary policy. The rapid rise in yields is a troubling one for a country with the largest public debt-to-GDP ratio in the developed world, which comes in at around 250%.

    Although the majority of Japan’s debt is held at home, any slackening in appetite from institutional buyers, who fund themselves at a spread over the JGB market, along with the BoJ’s ongoing gradual reduction of bond purchases, is increasing the vulnerability of the market.

    Fears About the Economy Before the Election

    The approaching race for the Upper House is a big factor behind the bond market sell-off. Japanese Prime Minister Shigeru Ishiba’s ruling Liberal Democratic Party (LDP) and its junior coalition partner Komeito are facing a difficult challenge, with local polls indicating they will struggle to win a majority in the chamber.

    The possibility of a weakened ruling coalition or political continuity is stoking fears about continued budget generosity. Opposition parties, riding the wave of platforms that promise to tackle surging living costs, are pushing for steps like consumption tax advisory reductions. Such policies, although popular with voters, would also widen the fiscal deficit, making Japan’s already stretched finances even worse.

    “As the volume is building around noise going into more fiscal spending, we took an underweight on Japan in general,” said Ales Koutny, head of international rates at Vanguard, speaking to the UK bond market’s headaches in recent years.

    BoJ’s Delicate Balancing Act

    The Bank of Japan is in a ticklish situation. Following its unconventional yield curve control (YCC) policy exit and, now, slow interest rate hikes (the cash rate sits at 0.5%), the central bank targets a sustained 2% inflation.

    But ramped-up fiscal spending could unravel all of this and leave the BoJ with little choice but to engineer monetary tightening faster than the pace most households and firms would be happy with. Even though the Ministry of Finance tried to cool things down by stating that it intended to cut 20-, 30- and 40-year debt sales to help mend supply-demand imbalances, the real issue is fiscal.

    “If a demand-less market continues and if investors see no rate hikes within this fiscal year, JGB volatility will go up, especially in the long end,” said Kentaro Hatono, a fund manager at Asset Management One.

    Everything now depends on the result of Sunday’s election. A major defeat for the ruling coalition may lead to another sell-off in super-long JGBs as investors bet on a massively swollen government deficit.

    The surge in yields, which have been rising steadily since the summer, has the potential to raise the cost of corporate loans and mortgages, in turn dampening domestic economic growth. Japan’s bond market readies for a volatile phase, with the election set to determine its fiscal course for years.