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Fed Hikes, Treasury Yields Drop, and China's Export Share Rises
The Federal Reserve's first rate hike in three years pushed its benchmark to 3.75-4.00% this week, with the Hong Kong Monetary Authority following suit. Despite the hike, the US 10-year Treasury yield dropped below 5%. Meanwhile, Hong Kong maintained…
Fed tightens policy, yields react
The US Federal Open Market Committee unanimously approved a 25 basis point rate hike on Thursday, setting the benchmark target range between 3.75% and 4.00%. This marks the central bank's initial increase in three years. Federal Reserve chief Kevin Warsh noted the need to address inflation, which he stated had been "too high" for "too long."
Following the Fed's announcement, the US 10-year Treasury yield settled at 4.94% on Friday, moving below the 5% level it had surpassed earlier in the week for the first time since 2023.
Asia's Financial Hubs and Global Trade Shifts
Responding to the Fed’s action, the Hong Kong Monetary Authority raised the city’s base rate to 4.25%. Despite this, HSBC, Bank of China (Hong Kong), and Standard Chartered — Hong Kong’s three primary note-issuing banks — kept their prime lending rates unchanged.
The Global Financial Centres Index affirmed Hong Kong’s standing as Asia’s leading financial hub for the fourth consecutive assessment. The city scored 756 points, one point behind London’s 757, while New York led the index with 761 points. Singapore placed immediately below Hong Kong with 755 points. The index evaluates business environment, human capital, infrastructure, financial sector development, and market reputation.
A Goldman Sachs report projects China’s average market share in export markets to increase from 18% this year to 31% by 2035, driving a 3.6-fold revenue growth for Chinese companies over the period. The report identifies significant growth potential in sectors dubbed “latecomers,” such as robotaxis, e-commerce, and surgical robots, while established sectors like car manufacturing may face greater competition.
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