MONEY MASTER

Kevin Warsh  could pursue an unconventional strategy to  lower US interest rates , even as most Federal Reserve officials remain cautious due to persistent inflation. A Two-Pronged Policy Approach Warsh is expected to argue that  shrinking the Federal Reserve’s balance sheet  could justify  cutting interest rates . The idea: Reduce the Fed’s balance sheet by US$1 trillion This acts like a  50 basis-point rate hike (tightening) Offset it with a  50 basis-point rate cut (easing) This effectively means  tightening and easing simultaneously , but with the goal of bringing  headline interest rates lower . Why the Balance Sheet Matters The Fed’s balance sheet — now over  US$6 trillion  — includes: US Treasuries Mortgage-backed securities (MBS) Holding these assets  keeps long-term interest rates lower  by supporting bond prices. Reducing the balance sheet would: Push  yields higher (tightening effect) Allow room for  r...

Singapore is increasingly likely to  tighten monetary policy , as rising energy costs from the Middle East conflict threaten to push inflation higher despite weakening growth. MAS Expected to Act Amid Rising Price Pressures The  Monetary Authority of Singapore  is widely expected to adjust policy at its upcoming review, with  15 out of 18 economists forecasting a tightening move . The shift comes as  imported inflation accelerates , driven by surging oil prices and higher logistics costs. Core inflation is projected at  1.9% , near the  upper bound of official forecasts , increasing pressure on policymakers to act. Unique Policy Tool: Currency Management Unlike most central banks, MAS uses the  Singapore dollar exchange rate  as its primary policy tool. Potential tightening measures include: Steepening the slope of the policy band Re-centering the band upward Or a combination of both The Singapore dollar has already been  strengthening t...

Quick Summary Surplus liquidity in China is flooding into metals markets , pushing gold, copper and silver to record highs Money supply is growing far faster than the real economy , reflecting weak consumption and investment Speculation, not physical demand , is driving much of the rally Gold stands out as a cultural and financial safe haven  for Chinese households What’s Driving the Metals Surge With  easy money and shrinking investment options , Chinese capital is pouring into commodities. Key forces at play: Ample liquidity  as the  People’s Bank of China  continues to support growth M2 money supply grew 8.5% YoY , far outpacing  nominal GDP growth of just 3.9% Property, equities, and deposits  offer unattractive returns Result:  Speculative trading explodes in metals futures Trading volumes in  silver, copper, aluminum, nickel and tin  on Chinese exchanges have surged to record levels. A Disconnect From the Real Economy Despite soari...

Executive Summary Singapore is approaching a  policy inflection point . While the  Monetary Authority of Singapore  (MAS)  is widely expected to  hold policy unchanged  at this week’s review, the balance of risks is  shifting decisively toward a hawkish pivot in 2026 . Stronger-than-expected growth, firming core inflation momentum, and sustained Singapore dollar strength suggest  policy accommodation has largely run its course . However, MAS is unlikely to tighten prematurely, preferring  signalling over action  at this stage. Our base case:  Hold now, hawkish guidance, tighten later . Macro Backdrop: Why the Bias Is Turning Growth Has Outperformed 2025 GDP: +4.8% , far above earlier expectations Q4 2025 growth: +5.7% YoY , led by electronics, pharmaceuticals, and resilient consumption Output gap is  closing faster than anticipated Inflation Momentum Is Rebuilding Core inflation has remained  elevated for three consecutive...

What’s happening The  US dollar is coming under renewed pressure  in early 2026 as investors reassess political, monetary and geopolitical risks tied to the US. The greenback is on track for its  sharpest three-day drop since April 2025 , when tariff threats triggered a broad selloff in US assets. Under  Donald Trump , policy unpredictability has resurfaced — from tariff threats and geopolitical brinkmanship to attacks on  Federal Reserve  independence — prompting investors to rethink long-held assumptions about dollar stability. Why the dollar is under fire Several forces are converging: Political risk premium is rising : erratic trade threats, diplomatic tensions, and renewed talk of a US government shutdown Monetary policy divergence : markets expect the Fed to cut rates at least twice this year, while other central banks pause or even tighten Fed leadership uncertainty : Chair Jerome Powell is set to step down in May, with speculation that a more dovish...

Bank Negara Malaysia  left its  Overnight Policy Rate (OPR) unchanged at 2.75% , a widely anticipated decision that reflects confidence in Malaysia’s stable growth and muted inflation outlook. The decision, announced after the Monetary Policy Committee’s first meeting of 2026, comes after a  25-basis-point rate cut in July 2025 , the country’s first easing move in five years. Since then, policymakers have opted to stay on hold, judging current conditions to be supportive enough without further stimulus. In its statement, BNM said the  current policy stance remains appropriate , balancing economic expansion with price stability, while stressing that it will continue to assess risks to growth and inflation amid a volatile global backdrop. Inflation dynamics remain favourable. The central bank expects  headline inflation to stay moderate in 2026 , helped by easing global cost pressures, while  core inflation is projected to remain stable and close to its long-...

A closely watched US inflation report due Thursday is expected to  reinforce the Federal Reserve’s cautious stance , with price pressures easing only gradually and still running above the central bank’s comfort zone. What the Market Expects Economists forecast that the  personal consumption expenditures (PCE) price index , the Fed’s preferred inflation gauge, will show  little change in momentum . Core PCE (ex-food & energy): +0.2% MoM +2.8% YoY Headline PCE: +0.2% MoM +2.8% YoY If confirmed, inflation would be  moving sideways , not accelerating — but still  well above the Fed’s 2% target . Why This Matters for Policy Core PCE tends to adjust more slowly than CPI, and recent data suggest inflation cooled only modestly toward the end of 2025. While consumer inflation closed December at  2.7% , PCE readings point to  stickiness rather than renewed disinflation . Economists note that: Inflation ran  hot but stable  in late 2025 Seasonal adj...

The  Monetary Authority of Singapore (MAS)  maintained its current monetary policy stance on Tuesday, keeping the  slope, midpoint, and width  of the Singapore dollar nominal effective exchange rate (SNEER) band  unchanged . The decision came as  Singapore’s economy grew 2.9% year-on-year in Q3 , outpacing forecasts of 1.9%. The central bank noted that growth has been  stronger than expected , with the  output gap remaining positive in 2025  before normalizing next year. Economists said the impact of  U.S. tariffs  has been milder than feared.  OCBC’s Selena Ling  expects 2025 GDP growth of about  3% , while  Maybank’s Chua Hak Bin  projects an even higher  3.5% , citing resilient domestic demand and exports. Singapore continues to rely on its  exchange rate-based policy  instead of interest rates, adjusting the SNEER through three levers — the  slope, midpoint,  and  band width...

 Key Takeaway Global markets kicked off the week higher as weak U.S. jobs data reinforced expectations for a Federal Reserve rate cut this month. Meanwhile, Japan’s political scene was shaken by Prime Minister Shigeru Ishiba’s resignation, sending the yen lower and spotlighting uncertainty over the Bank of Japan’s next policy steps. U.S. Rate Cuts in Focus August jobs report showed far fewer hires than expected. Markets have fully priced in a  25 bps Fed rate cut  this month, with a slim 8% chance of a larger  50 bps move . Traders expect nearly  70 bps of easing by year-end . S&P 500 futures gained 0.25% in Asian trading after last week’s record highs. Investor focus now shifts to  U.S. inflation data (Thursday) , which could influence the Fed’s tone. Yen Slumps After Ishiba Exit PM Shigeru Ishiba resigned Sunday, sparking uncertainty in the  world’s fourth-largest economy . Investors are watching if successor candidates push for  looser fisc...

 Market Snapshot Bitcoin (BTC):  –1.9% at ~US$111,119 (24h), down from its record high of  US$124,000  earlier this month. Ethereum (ETH):  –2.9%. Ripple (XRP):  –3.6%. Solana (SOL):  +1.0%. Dogecoin (DOGE):  –2.4%. Why Cryptos Are Falling Interest Rate Uncertainty Optimism over U.S. rate cuts had helped drive Bitcoin to new highs earlier in August. Markets are reassessing expectations as  President Donald Trump pressures the Federal Reserve  for lower rates, while Fed Governor Lisa Cook challenges his move to dismiss her. Without clear dovish signals, risk assets like crypto face headwinds. Dollar Dynamics Lower rates typically weaken the dollar, lifting crypto valuations. With Fed policy still uncertain, the dollar remains firm, creating a drag on digital assets. Investor Sentiment Analysts note markets are reluctant to price in substantial dovish shifts until concrete data supports them. ING’s Francesco Pesole: “Markets are seemingly ...

  Tariffs and Tokens – The New U.S. Playbook Washington’s trade and monetary strategy is becoming increasingly intertwined. The U.S.–China tariff truce, extended for 90 days earlier this month, locks in a  10% baseline tariff  with “reciprocal” rates ranging up to  50% , including Malaysia’s  US$150 billion equipment purchase package  and annual  US$3.4 billion LNG commitment  via Petronas. Indonesia, meanwhile, accepted a fixed  19% tariff  in its bilateral deal. But U.S. President Donald Trump’s warning of “irreversible losses” and even a “1929-style depression” if courts overturn his tariff powers underscores that  law and politics have become a core component of market risk premia . Parallel to tariffs, the  GENIUS Act (July 2025)  has reshaped the stablecoin ecosystem. By mandating  1:1 reserves in high-quality liquid assets , stablecoins now effectively channel demand into U.S. Treasuries, embedding fiscal engin...

Asian equities advanced on Monday, led by Chinese stocks, as investors positioned for a dovish US Federal Reserve pivot and awaited  Nvidia’s earnings  later this week — a key test for lofty AI-driven valuations. The  MSCI Asia-Pacific ex-Japan Index  rose  1.5% , with  Chinese blue chips up 1.4%  to their highest since mid-2022. The rally in China has pushed the index almost  10% higher in August , despite persistent weakness in domestic demand and corporate pricing power, highlighting the liquidity-fuelled nature of gains. Elsewhere, Japan’s  Nikkei gained 0.4% , South Korea climbed  1.1% , and Australia added  0.2% . Fed Pivot Drives Sentiment Federal Reserve Chair  Jerome Powell ’s speech at Jackson Hole bolstered expectations of monetary easing: Futures now price an  84% probability  of a  25bps cut in September , with at least  100bps of cumulative cuts by mid-2026 . The dovish tilt pressured Treasury ...

The Nasdaq and S&P 500 fell on Wednesday as the Magnificent 7 tech giants led declines, while the Federal Reserve’s July minutes pointed to a split on the path forward for monetary policy. Key Index Performances Nasdaq Composite : -0.8% to 21,172.86 S&P 500 : -0.2% to 6,395.78 Dow Jones Industrial Average : +0.06% to 44,938.31 While the Dow managed a narrow gain, risk appetite was clearly weaker in growth-heavy indices. The Magnificent 7 Lead the Retreat Apple (AAPL) : -1.97% Intel (INTC) : -6.99% Nvidia (NVDA) : -0.14% Amazon (AMZN) : -1.84% Other top underperformers included Micron (MU), with tech, consumer discretionary, and communication services sectors all ending in the red. Energy stocks, on the other hand, emerged as the  top gainer , buoyed by rising oil prices. Fed Minutes: Mixed Signals, Lingering Inflation Concerns The  July 29–30 FOMC meeting minutes  revealed a division among Fed officials: Some focused on  inflation risks Others flagged concern...