Regional economy
China: Exchange rate
GTM ASIA
Chinese yuan exchange rate
CFETS CNY Index*
108
106
06/08/18:
Risk reserve ratio
for forward sales of
CNY raised to 20%
from 0%
11/12/15:
Launch of the CFETS
index
104
102
11/08/15:
Market reform
to mechanism
of CNY
exchange rate
96
94
90
15/09/22:
Reserve ratio on foreign
exchange deposit cut to
6% from 8%
'16
6.1
6.5
6.7
15/05/22: Reserve
ratio on foreign
exchange deposit cut
to 8% from 9%
26/05/17:
Introduction of counter-cyclical factors to
stabilize daily central parity
'15
5.9
6.3
Weaker CNY
92
'17
'18
6.9
7.1
7.3
27/10/20: Suspension of
counter-cyclical factor
'19
'20
'21
'22
CFETS CNY Index
13
5.7
12/10/20:
Risk reserve ratio for
forward sales of CNY
cut to 0% from 20%
100
98
USD/CNY
5.5
28/09/22:
Risk reserve ratio for
forward sales of CNY
raised to 20% from 0%
Stronger CNY
13
Source: China Foreign Exchange Trade Center, FactSet, J.P. Morgan Asset Management. *CFETS CNY Index is the China Foreign Exchange Trade System basket of 24
currencies traded against the Chinese renminbi, where the base value was set at 100 as of 31/12/14. Past performance is not a reliable indicator of current and future
results.
Guide to the Markets – Asia. Data reflect most recently available as of 30/06/24.
'23
'24
USD / CNY (inverted)
7.5
Regional economy
China: Exchange rate
GTM ASIA
U.S. tariff announcements* and currency in 2018-2019
U.S. – China interest rate differential and currency
USD / CNY
3.0%
7.4
7.4
Weaker CNY
7.2
2.0%
Phase 1 deal
agreed
15% tariff on
List 4A
7.2
10% tariff on
List 3
7.0
1.0%
7.0
0.0%
6.8
6.6
-1.0%
6.4
-2.0%
Stronger CNY
'10
'12
'14
'16
10-year U.S. Treasury yield
minus 10-year Chinese
government bond yield
12
'18
'20
'22
'24
Truce called 25% tariff on
List 3
25% tariff on
List 1&2
6.8
-3.0%
12
Solar panels
and washing
machines
6.6
6.2
6.4
6.0
6.2
Jan-18
25% on steel &
10% on aluminum
May-18
Sep-18
Jan-19
USD / CNY
Source: FactSet, Federal Reserve, J.P. Morgan Asset Management. *Labels refer to when the tariffs were announced, and thus, would precede the actual implemented
increase in tariffs. Various tariffs on solar panels and washing machines were announced January 2018, 25% tariff on steel and 10% on aluminum were announced in
March 2018, 25% tariff on Lists 1&2 were announced June 2018, 25% tariff on List 3 was announced in May 2019 (initially set at 10%), 15% tariff on List 4A was
announced August 2019. Lists refer to U.S. imports from China. A temporary truce was announced in December 2018 at the G20 summit. Phase 1 deal was officially
announced in December 2019 and signed in January 2020.
Guide to the Markets – Asia. Data reflect most recently available as of 31/03/25.
May-19
Sep-19
Regional economy
Japan: Currency
GTM ASIA
U.S. – Japan interest rate differential and USD / JPY
Net short positions** on yen and USD / JPY
4.5%
180
Number of contracts*** at Chicago Mercantile Exchange
250,000
Weaker JPY
4.0%
14
170
Weaker JPY
200,000
160
150,000
150
100,000
140
50,000
130
0
120
-50,000
110
-100,000
100
160
3.5%
140
3.0%
2.5%
120
2.0%
100
1.5%
1.0%
80
0.5%
Stronger JPY
Stronger JPY
0.0%
'10
'12
'14
'16
10-year U.S. Treasury yield
minus 10-year JGB* yield
14
'18
'20
'22
'24
USD / JPY
60
-150,000
Jan-20
Oct-20
Jul-21
Apr-22
Jan-23
Net short positions
Source: Bloomberg, Commodity Futures Trading Commission, FactSet, J.P. Morgan Asset Management. *JGB refers to Japanese government bonds. **Net positions
capture that of leveraged funds and asset managers. Above 0 will mean net short positions and below 0 will mean net long positions. ***Japanese futures contracts are
valued at 12,500,000 JPY each.
Guide to the Markets – Asia. Data reflect most recently available as of 31/03/25.
Oct-23
Jul-24
USD / JPY
90
U.S. dollar
GTM ASIA 69
U.S. dollar and interest rate differential
Index
Yield spread
140
3.0%
Recessions
Other asset classes
130
120
2.0%
110
1.5%
100
1.0%
90
0.5%
80
0.0%
70
-0.5%
60
'98
'00
U.S. dollar index*
69
2.5%
'02
'04
'06
'08
'10
'12
'14
'16
'18
'20
'22
'24
U.S. minus DM 10-year government bond yield**
Source: FactSet, OECD, Tullett Prebon, WM/Reuters, J.P. Morgan Asset Management. *The U.S. dollar index shown here is fixed-weighted against major currencies.
Major currencies are the euro, Japanese yen, British pound, Canadian dollar, Swedish kroner and Swiss franc. **DM is developed markets and the yield is calculated as a
GDP-weighted average of the 10-year government bond yields of Australia, Canada, France, Germany, Italy, Japan, Switzerland and the UK. Past performance is not a
reliable indicator of current and future results.
Guide to the Markets – Asia. Data reflect most recently available as of 31/03/25.
-1.0%
Currencies
GTM ASIA 70
Currency deviation from 10-year average in real effective exchange rate* terms
Number of standard deviations away from long-term average**
5
4
FX above
long-term
average
3
2
Max
1
Current
0
Min
-2
-3
Source: FactSet, J.P. Morgan Economic Research, J.P. Morgan Asset Management. *The real trade-weighted exchange rate index is the weighted average of a
market’s currency relative to a basket of other major currencies adjusted for the effects of inflation. The weights are determined by comparing the relative trade
balances, in terms of one market’s currency, with other markets within the basket. **Long-term average is calculated from 2014.
Past performance is not a reliable indicator of current and future results.
Guide to the Markets – Asia. Data reflect most recently available as of 31/03/25.
U.S.
UK
Eurozone
Russia
Mexico
Thailand
Turkey
India
Malaysia
S. Africa
Australia
Brazil
Taiwan
Japan
Canada
China
Indonesia
-5
-6
70
FX below
long-term
average
-4
Korea
Other asset classes
-1
United States: Federal finances
The 2025 federal budget
Share of GDP, 1973-2035, CBO Baseline Forecast, inverted
-15%
$8.0
Global economy
$7.0
$5.0
$4.0
Deficit: $1,865bn (27%)
Other mandatory: $855bn (12%)
Tariffs: $80bn (1%)
Other: $179bn (3%)
Corporate taxes: $524bn (7%)
Medicaid: $656bn (9%)
Payroll taxes: $1,759bn (25%)
$3.0
TCJA
extension*
-7%
Non-defense disc.: $989bn
(14%)
Medicare:
$1,145bn (16%)
Net interest outlays
-3%
1%
5%
Primary deficit or surplus
'73
'78
'83
'88
'93
'98
'03
'08
'13
Income taxes: $2,621bn (37%)
$1.0
31
Sources of financing
'33
2035:
130.0%
2024:
98.2%
2035:
118.5%
80%
60%
20%
$0.0
'28
extension*
Forecast
40%
Net interest: $952bn (14%)
Total government spending
'23
Share of GDP, 1940-2035, CBO Baseline Forecast, end of fiscal year
140%
TCJA
100%
Social Security:
$1,572bn (22%)
'18
Federal net debt** (accumulated deficits)
120%
$2.0
Forecast
Total deficit or surplus
-11%
Total spending: $7.0tn
Defense: $859bn
(12%)
31
Federal deficit and net interest outlays
USD trillions
$6.0
GTM ASIA
'40
'48
'56
'64
'72
'80
'88
'96
Source: CBO, J.P. Morgan Asset Management; (Left) Numbers may not sum to 100% due to rounding; (Top and bottom right) BEA, Treasury Department. Estimates are from the Congressional
Budget Office (CBO) January 2025 An Update to the Budget Outlook: 2025 to 2035. “Other” spending includes, but is not limited to, health insurance subsidies, income security and federal civilian
and military retirement. Years shown are fiscal years. All CBO estimates are adjusted by JPMAM to reflect GDP revisions resulting from the 2024 annual update of the National Economic Accounts.
*Adjusted by JPMAM to include estimates from the CBO May 2024 report “Budgetary Outcomes Under Alternative Assumptions About Spending and Revenues” on the extension of TCJA
provisions. Forecasts are not a reliable indicator of future performance. Forecasts, projections and other forward-looking statements are based upon current beliefs and expectations. They are for
illustrative purposes only and serve as an indication of what may occur. Given the inherent uncertainties and risks associated with forecasts, projections or other forward-looking statements, actual
events, results or performance may differ materially from those reflected or contemplated.**Net debt refers to debt held by the public, which excludes intragovernmental holdings (such as securities
held by government trust funds, like the Social Security Trust Fund). Gross federal debt is the sum of debt held by the public and intragovernmental debt.
Guide to the Markets – Asia. Data reflect most recently available as of 31/03/25.
'04
'12
'20
'28