Usually, a band is maintained by the central bank, which buys or sells foreign exchange as needed to keep the market price of the yuan within said band. But that doesn’t seem to be what China did. The foreign currency balance sheet of the PBOC was totally flat for most of 2023 (hence the PBOC’s assertions that it is mostly out of the currency market). There were adjustments to banks’ required reserve ratio that freed up a bit of foreign exchange held in the banks’ reserves, but the PBOC doesn’t seem to have used any of its own funds to keep the yuan inside the weak edge of the band from August through October. With a bit of digging, it is possible to get a relatively clear understanding of how the PBOC avoided intervention when the fix was fixed and the yuan was at the weak edge of the band: there are multiple reports suggesting that the PBOC leaned on China’s state banks to do its dirty work.
- Date Posted:
- February 6, 2024
The West's share of overall US population has flattened, and now appears to be falling. We believe relative housing affordability remains a key part of the story. Exhibit 7 shows a fairly close relationship between where a metropolitan statistical area (MSA’s) median mortgage payment in December 2023 stands compared to that of the overall US and the net change in population growth in that MSA over the last year, according to Bank of America internal data. Where an MSA has a relatively high median mortgage payment, its population growth has usually been negative or at best weakly positive. Looking at the MSAs in the Pacific states in the West (red squares in the exhibit), they all tend to have higher-than-average mortgage payments relative to the US. By contrast, in the southern Mountain states (yellow squares), mortgage payments are lower than the US average, so outward migration is potentially a reaction to housing costs.