Core Viewpoint - Moody's warns that the rise of "cryptoization" driven by stablecoins poses increasing challenges to monetary sovereignty and financial stability in emerging markets [1][2]. Group 1: Impact on Monetary Sovereignty - The adoption of stablecoins is weakening the control central banks have over interest rates and exchange rates, as these currencies are often pegged to fiat currencies like the US dollar [1][2]. - There is a risk of "deposit flight" from domestic banks to stablecoins or crypto wallets, which could affect bank liquidity and pose a potential threat to overall financial stability [1]. Group 2: Growth of Digital Assets - As of 2024, the number of global digital asset holders has reached approximately 562 million, reflecting a 33% increase from the previous year [1]. - The fastest growth in digital assets is observed in emerging markets such as Latin America, Southeast Asia, and Africa, driven by remittances, mobile payments, and inflation hedging needs [1]. Group 3: Systemic Risks of Stablecoins - Despite being perceived as relatively safe, the rapid growth of stablecoins introduces systemic vulnerabilities, including the risk of a bank run on reserves and potential costly government bailouts if they become unpegged [3]. Group 4: Regulatory Gaps and Imbalances - The global adoption of crypto assets shows significant regional imbalances, with less than one-third of countries implementing comprehensive digital asset regulations, exposing many economies to market volatility and systemic shocks [4]. - The regulatory landscape is highly fragmented, and the differing growth patterns between developed and emerging markets highlight the potential for financial instability as regulatory measures lag behind [4].

Core Viewpoint - Scope Ratings has downgraded the outlook for France's sovereign credit rating to negative while maintaining its "AA-" rating, highlighting the country's deteriorating credit situation amid political deadlock and fiscal challenges [1][2] Group 1: Rating Changes and Impacts - This marks the third downgrade for France in two weeks, indicating significant credit deterioration due to weak fiscal conditions and complex political landscape [1] - Previous downgrades by Fitch and Dominica Bond Rating Agency have already impacted the French financial markets [1] Group 2: Political and Fiscal Challenges - President Macron's early elections led to the ruling party losing its parliamentary majority, hindering deficit reduction plans [1] - New Prime Minister Sebastien Lecornu has not clearly indicated willingness to compromise on deficit reduction, with opposition parties demanding less stringent measures [1][2] - The Socialist Party holds key seats in parliament, complicating budget consensus efforts [1] Group 3: Economic Outlook - Lecornu aims for a deficit target of around 4.7% for 2025, with a long-term goal of reducing it to below 3% by 2029, but faces significant political opposition [2] - Rising political instability and social unrest are making it difficult to achieve broad political consensus for substantial deficit reduction [2] - Despite unexpected economic growth in the first half of the year, private sector activity fell to a five-year low in September, indicating weakened economic momentum [2] Group 4: Debt Projections - Scope warns that without further fiscal reforms, government debt as a percentage of GDP could rise to 125% by 2030, becoming one of the fastest-growing among similar countries [3] - This trend poses risks to France's fiscal sustainability and could trigger broader financial repercussions across Europe [3]

Group 1 - Barclays analysts indicate that despite unusual negative events in recent months, the US dollar has remained stable within a narrow range, supported by expectations of an economic rebound in the coming months [1] - The Swiss National Bank has paused interest rate cuts but may consider lowering rates below zero in the future due to external pressures and economic outlook concerns [1] - Indonesia's central bank's recent unexpected rate cut is seen as a response to political pressure, which may negatively impact the Indonesian rupiah and fiscal credibility [2] Group 2 - Thailand's export growth has significantly slowed from 11% in July to 5.8% in August, indicating weakened export momentum following the implementation of US tariffs [2] - The Thai government's credit outlook has been downgraded to negative by Fitch due to rising public finance risks and ongoing political uncertainty [2] - Apollo Global Management highlights a significant rise in US inflation risks, with 72% of CPI components exceeding the Federal Reserve's 2% target, raising concerns about a potential resurgence of inflation [3]

Group 1 - Jefferies indicates that a potential downgrade of France's sovereign rating could lead to forced selling of French government bonds by certain investors [1][3] - Political instability and fiscal challenges in France are currently exerting selling pressure on its bonds, which may intensify further [1] - The yield spread between French and German 10-year bonds has widened to 82 basis points, nearing the highest level since January [1] Group 2 - A downgrade in France's rating could push it into a lower credit quality category, prompting passive selling by Asian reserve management institutions [1][3] - Fitch has already downgraded France's rating from AA- to A+, which is four notches below AAA [3] - The next rating updates from Moody's and S&P are scheduled for October 24 and November 28, respectively, with a probability of at least one downgrade exceeding 50% [3]

Group 1 - The core viewpoint is that France's sovereign credit rating has been downgraded by two agencies in one week, reflecting severe consequences of political and economic instability [1][2] - The recent political turmoil includes the collapse of Prime Minister Borne's government due to failed confidence votes on budget deficit reduction measures, leading to the appointment of a new Prime Minister, Sebastien Lecornu, without stabilizing the political situation [1][2] - Morningstar DBRS indicates that the political environment and increasing government instability hinder the effectiveness of France's fiscal policy setting, raising execution risks for achieving fiscal targets in the coming years [1][2] Group 2 - Fitch downgraded France's sovereign credit rating from "AA-" to "A+" due to political divisions obstructing necessary reforms, which negatively impacts public finances and is expected to worsen public debt from 113.9% of GDP in 2025 to 121% by 2027 [2] - Political and fiscal turmoil has led to asset sell-offs in France, increasing borrowing costs relative to other European countries, with bond premiums nearly doubling since Macron's election call [2] - Despite exceeding growth expectations in the first half of the year, uncertainty is projected to lead to a more sluggish economy, as businesses and households hesitate on investment and consumption [2][3] Group 3 - Lecornu has not yet clarified how to negotiate with opposition lawmakers demanding tax increases and slower deficit reduction, with the primary task being to form a new government in a divided parliament [2][3] - Morningstar DBRS believes Lecornu's measures may be relatively weak, as previous proposals for significant tax increases and budget cuts were rejected by opposition votes [3] - The outlook for France's rating has been adjusted from "negative" to "stable," indicating some advantages as the second-largest economy in the Eurozone, but warns of potential further downgrades if structural fiscal imbalances and debt ratios continue to rise [3]

Gold - Gold prices reached a new historical high, with potential to challenge the $3700 level, indicating strong bullish control and suggesting further surprises ahead [1] - Moody's warning about the U.S. economy being on the brink of recession has heightened market concerns, particularly due to a significant drop in housing permits [1] - Analysts suggest that the combination of slowing economic data, ongoing tariff negotiations, and internal conflicts in the U.S. could lead to a recession, which is reflected in the current gold price trends [1] - Technical analysis shows a bullish daily candle for gold, with a return to moving averages and a potential for new highs, while support is noted at $3675 [1] Oil - Oil prices experienced a slight rebound, but the underlying issue remains weak demand against increasing supply, making it difficult for oil prices to perform well [2] - OPEC+ has agreed to gradually increase oil production starting October 2025, marking a shift from maintaining oil prices to competing for market share [2] - The anticipated oversupply in the global oil market could exceed 2 million barrels per day in Q4, supporting a bearish outlook for oil prices despite potential geopolitical risks [2] - Technical indicators show a clear downtrend for oil prices, with resistance noted at $64 [2] U.S. Dollar Index - The U.S. dollar index continues to decline, reaching recent lows, with upcoming interest rate cuts expected to exacerbate this trend [3] - The Congressional Budget Office indicated that tariffs imposed by the Trump administration have raised inflation above initial expectations, complicating the Fed's potential rate cuts [3] - Economic growth forecasts for the U.S. have been downgraded, suggesting a risk of stagflation, which would further challenge the Fed's monetary policy [3] Technical Analysis - The U.S. dollar index shows a series of small bearish candles, facing significant resistance from long-term moving averages, with a potential short-term rebound but overall bearish sentiment [4] - The Nikkei 225 index shows a small bullish candle but indicates overbought conditions, suggesting caution against potential price pullbacks [5] - Copper prices are showing weakness despite a recent bullish candle, with a significant chance of a short-term decline, and resistance is noted at $4.63 [6]

Core Viewpoint - Fitch Ratings downgraded France's credit rating from "AA-" to "A+", indicating a shift from "very low" to "low" default risk, which has raised concerns among political figures but is seen as a manageable situation by economists [1][2]. Group 1: Rating Downgrade Implications - The downgrade is viewed as a negative signal but does not imply an economic crisis; rather, it highlights a political crisis in France [2]. - Despite the downgrade, France's credit status remains relatively stable compared to countries like Spain and Italy, suggesting that the impact on the economy will not be severe [1][2]. Group 2: Political Context - The political landscape in France is described as structurally paralyzed, with a fragmented parliament leading to instability and challenges in passing fiscal policies [2]. - The resignation of former Prime Minister François Bayrou due to a failed confidence vote reflects the ongoing political turmoil, with the new Prime Minister facing significant challenges from far-right forces [2]. Group 3: Economic Risks - The real risk for France is likened to an "Italian-style dilemma," where rising debt financing costs could gradually limit the country's investment capacity, posing a long-term threat [2]. - An increase in interest rates by one percentage point could lead to an additional €3 billion in annual spending, accumulating to €30 billion over ten years, which is comparable to France's annual investment needs for emission reduction goals [2]. Group 4: Government Strategy - The new Prime Minister's primary task is to ensure the budget passes smoothly to restore market confidence, balancing efficiency and compromise among various political interests [3]. - The government may need to adjust its €44 billion fiscal target to facilitate budget approval and stabilize the political situation, which is crucial for regaining investor trust and maintaining lower financing costs [3].

Core Viewpoint - Fitch Ratings downgraded France's credit rating from "AA-" to "A+", indicating a shift from "very low" to "low" default risk, which has raised concerns among political figures but is seen as a manageable situation by economists [1][2] Group 1: Rating Downgrade Implications - The downgrade is viewed as a negative signal but does not imply an economic crisis; rather, it highlights a political crisis in France [2] - Despite the downgrade, France's credit status remains relatively stable compared to countries like Spain and Italy, suggesting limited immediate economic impact [1][2] Group 2: Political Context - The political landscape in France is described as structurally paralyzed, with a fragmented parliament leading to instability and challenges in passing fiscal measures [2][3] - The resignation of former Prime Minister François Bayrou and the rise of extreme right forces complicate the government's ability to secure a stable majority [2] Group 3: Economic Risks - The real risk for France is likened to an "Italian-style dilemma," where rising debt financing costs could gradually limit investment capacity, rather than an immediate financial crisis [2] - An increase in interest rates by one percentage point could lead to an additional €3 billion in annual expenditures, accumulating to €30 billion over ten years, which is significant for France's fiscal health [2] Group 4: Government's Fiscal Strategy - The new Prime Minister, Sébastien Lecornu, faces the critical task of passing the budget to restore market confidence, balancing efficiency and compromise among various political interests [3] - The government must decide whether to maintain the €44 billion fiscal target while ensuring budget approval to stabilize the political situation and regain investor trust [3]

Core Viewpoint - The post-COVID economic recovery in the U.S. is facing significant challenges, with increasing evidence of economic slowdown despite previous optimism [1] Labor Market Weakness - The U.S. labor market is showing signs of deterioration, with a downward revision of non-farm employment data by 911,000 jobs, marking the largest adjustment since 2000 [3] - The downward revisions are concentrated in the private sector, particularly in leisure, hospitality, professional services, retail, and manufacturing [3] - Jamie Dimon from JPMorgan highlights that consumer confidence may be impacted, although most consumers still have jobs and continue to spend [4] Consumer Spending Trends - Deloitte forecasts that retail sales growth for the holiday season in 2025-2026 will drop to 2.9%-3.4%, the lowest since the pandemic, indicating weakened consumer momentum [5] - A PwC survey indicates that U.S. households plan to reduce average holiday spending by approximately 5.3%, particularly affecting gift budgets [5] - Credit card debt has reached a historical high, with serious delinquencies at their highest level in over a decade [5] Market Expectations for Rate Cuts - Fitch Ratings predicts that the Federal Reserve will implement two 25 basis point rate cuts in September and December, with three additional cuts expected in 2026 due to concerns over the labor market and consumer demand [7] - Market participants are increasingly betting on rate cuts, with over 90% probability of a total reduction of 75 basis points by the end of December [7] - JPMorgan warns that even if rate cuts occur, it may trigger a sell-off in the stock market, leading to short-term declines despite a 10% rise in the S&P 500 this year [7]

Economic Policies - The US will impose a 15% tariff on most EU goods, including cars and pharmaceuticals, while the EU will eliminate tariffs on US industrial products[2] - The US July new housing starts increased by 5.2% to 1.428 million units, exceeding market expectations of 1.29 million[2] - The US August Markit Manufacturing PMI preliminary value reached 53.3, the highest since May 2022, significantly above the expected 49.5[2] Market Trends - Global stock markets showed mixed performance, with US tech stocks under pressure due to concerns over AI commercialization returns[12] - The S&P 500 index rose by 0.3%, while the Nasdaq fell by 0.6% during the week[14] - The CME FedWatch data indicated a decrease in the probability of a 25 basis point rate cut in September from 92.1% to 75%[2] Inflation and Employment - The latest initial jobless claims in the US rose by 11,000 to 235,000, the highest since June, surpassing the expected 225,000[2] - The UK July CPI increased to 3.8%, the fastest rise since January 2024, with core CPI also at 3.8%[4] Global Asset Performance - Brent and WTI crude oil prices rose by 2.9% and 1.4%, respectively, while gold prices remained stable[20] - The US dollar index fell by 0.12% to 97.72, with the euro and yen strengthening against the dollar[23]