U.S. Consumption Remains Strong Despite Delinquencies

On the latest episode of Macro Markets, Cointelegraph analyst Marcel Pechman explained why United States consumption remains strong despite increasing auto-loan and credit card balance delinquency. Pechman said that consumers had built a cushion of extra cash savings due to the U.S. government’s injection of money to avoid a recession and the temporary forgiveness of student loan repayments.

However, Business Insider reported that investment bank JPMorgan claimed that “consumers have spent down the entirety of their excess savings from the pandemic, which at one point totaled more than $2 trillion.” Pechman believes that if JPMorgan’s predictions are correct, the ai stock market should have been trading much lower. Despite this, Pechman still does not advise betting against the S&P 500, as inflation is around the corner and the government may be forced to inject liquidity to prevent a recession.

Chinese Central Bank’s Intervention After Yuan’s Low

Pechman then discussed the Chinese central bank’s intervention after the yuan hit a 16-year low against the U.S. dollar. According to the analyst, the biggest risk is the market doubting the country’s ability to sustain a stronger yuan, meaning betting that the People’s Bank of China’s reserves won’t be enough to sustain the desired level.

In essence, Pechman argued that the Chinese central bank’s actions have limits and are ultimately a risky bet. For now, the analyst believes that there is no imminent risk coming from the yuan, but it is worth keeping an eye on.

For further insights into these matters, check out the most recent episode of Macro Markets, now available on the recently launched Cointelegraph Markets & Research YouTube channel.

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