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28 June 2017 Chinese Profits Growth to Decelerate, That's a Good Thing (My Publications)

Chinese industrial profits growth rose to 16.7% year-on-year in May, from 14.0% in April. But this headline is highly misleading. Profits growth data are about as cyclical as they come so taking one point in the year and looking back 12 months is very arbitrary. Moreover, the data are very volatile over short periods.

15 September 2017 Chinese Consumption and Investment is Weakening in Q3 (My Publications)

The Chinese activity data published yesterday were much weaker than expected; growth rates fell resoundingly. Did analysts really get it wrong, or is this just another example of erratic Chinese data?

12 September 2017 Chinese PPI Overshoots, Inflation has been Sticky but Stable (My Publications)

Chinese PPI inflation surprised analysts with a sharp rebound to 6.3% in August, from 5.5% in July, above the consensus, 5.7%.

10 August 2017 Chinese Producer Price Inflation is Proving Sticky (My Publications)

Chinese PPI inflation was unchanged at 5.5% in July; it had been expected to rise modestly. Officially, inflation peaked at 7.8% in February, but we think this peak was artificially high, thanks to seasonal effects. The slowing in PPI inflation since the peak appears to suggest that monthly price gains have slowed sharply. We find little evidence to support this.

16 June 2017 Chinese Growth to Slump Under the Burden of Deleveraging (My Publications)

Wednesday's money data confirmed that Chinese households have continued to borrow into Q2 but at a slower rate than in 2016. The slowdown will really set in during the second half, and into 2018. Households have done a sterling job of taking over the borrowing baton from corporates, but they can't do everything.

24 July 2017 Asian Trade Dragged Down by Chinese Slump (My Publications)

Korean exports are often a useful gauge of Asian and global trade; the country sits near the beginning of the global supply chain. It also happens to publish early in the data cycle and provides a measure of exports in the first 20 days of the month.

2 August 2017 Inflation to Erode Chinese Demand in the Second Half (My Publications)

The Caixin manufacturing PMI rebounded to 51.1 in July from 50.4 in June, soundly beating the consensus for no change. The PMIs are seasonally adjusted but the data are much less volatile on our adjustment model. On our adjustment, the headline has averaged 50.9 so far this year, modestly higher than in the second half of last year.

28 July 2017 Korean GDP and Chinese Pro ts Con rm China is Slowing (My Publications)

Korean real GDP growth slumped in Q2 to 0.6% quarter-on-quarter, from 1.1% in Q1, as both the main drivers--construction and exports--ran out of steam simultaneously. Construction investment grew by 1.0%, sharply slower than the 6.8% in Q1 and contributing just 0.2% to GDP growth in Q2, a turnaround from the 1.1 percentage point contribution in the first quarter.

8 August 2017 Chinese Capital Outflows Well -Managed while Conditions Benign (My Publications)

The external environment was relatively benign for China in July. The euro and yen appreciated as markets began to question how long policy can remain on their current emergency settings.

23 June 2017 PBoC is to the Chinese Yield Curve as Dr Frankenstein is to the Monster (My Publications)

China has undoubtedly been through a credit tightening, commonly explained as the PBoC attempting to engineer a squeeze, to spur on corporate deleveraging.

6 July 2017 Chinese Service Sector Downtrend to Continue into the Second Half (My Publications)

China's service sector slowed again in June, with the Caixin PMI falling to 51.6 from 52.8 in May. The Q2 average of 52.0 was only minimally lower than the 52.6 in Q1.

14 July 2017 Ignore the Headline Trade Numbers, Chinese Growth is Slowing (My Publications)

China's headline trade numbers appear to paint a picture of an economy in rude health but scratch the surface and the story is quite different. The trade surplus rose to$42.8B in June from $40.8B in May, hitting consensus.

20 September 2017 Is China set to Open Further its Financial Sector to Foreigners? (My Publications)

Bloomberg reported on Monday that the PBoC is drafting a package of reforms to give foreign investors greater access to the China's financial services sector. This could involve allowing foreign institutions to control their local joint ventures and raising the 25% ceiling on foreign ownership of Chinese banks.

26 Jan. 2016 IFO Points to Slow Start to Q1 for the German Economy (My Publications)

Yesterday's IFO report reinforced the message from the PMIs that the Eurozone economy stumbled slightly at the beginning of the first quarter. The headline business climate index fell to an 11-month low of 107.3 in January, from a revised 108.6 in December, hit mainly by a drop in the expectations component. Intensified market volatility and worries over further weakness in the Chinese economy likely were the main drivers. Last week's dovish message from Mr. Draghi, however, came after the survey's cut-off date, leaving us cautiously optimistic for a rebound next month.

23 Sept. 2015 Slow Growth in China is a Risk, but Not the Whole Story in the EZ (My Publications)

Expectations that the ECB will respond to weakening growth in China with Additional stimulus mean that survey data will be under particular scrutiny this week. The consensus thinks the Chinese manufacturing PMI--released overnight--will remain weak, but advance PMIs in the Eurozone should confirm that the cyclical recovery remained firm in Q3. We think the composite PMI edged slightly lower to 54.0 in September from 54.3 in August, consistent with real GDP growth of about 0.4% quarter-on-quarter in Q3.

4 September 2017 China's PMIs Imply Producer Prices are Still Rising Rapidly (My Publications)

This Monitor provides a summary of the main points of interest over the two weeks we were out. The Chinese Caixin manufacturing PMI, published last Friday, confounded expectations for a modest fall, rising to 51.6 in August from 51.1 in July.

16 August 2017 China's Credit Conditions Ease, but GDP Slowdown is set to Continue (My Publications)

Chinese M1 growth has slowed sharply in the past year from the 25% rates prevailing in the first half of last year. Growth appeared to rebound in July to 15.3% year-over-year, from 15.0% in June. But the rebound looks erratic. Instead, growth has probably slowed slightly less sharply in 2017 than the official data suggest, but the downtrend continues.

11 Jan. 2016 Brazil's Inflation Hits a 13-Year High - Copom Will Hike Again (My Publications)

Last week's events highlighted the seriously challenging global environment for LatAm equities and currencies. Trading in Chinese shares was stopped twice early last week, after falls greater than 7% of the CSI 300 index reverberated around the world. Markets were calmer on Friday but the volatility nevertheless reminded investors that LatAm's economies are floating in rough waters and their resilience will be put to the test again this year. The Fed's policy normalization, the unwinding of the leverage in EM, the continued slowdown of the Chinese economy, low commodity prices and currency depreciation are all real threats across the continent.

08 Jan. 2016 Will Lower Oil Prices and Equity Volatility Force the ECB's Hand? (My Publications)

The relatively upbeat message from a plethora of Eurozone data this week remains firmly sidelined by chaos in equity and credit markets. EZ Equities struggled towards the end of last year in the aftermath of the disappointing ECB stimulus package, and now, renewed weakness in oil prices and further Chinese currency devaluation have added pressure, by refocusing attention on already weak areas in the global economy.

11 September 2017 China's Trade Surplus Edges Lower with net Trade Contributing Little (My Publications)

Chinese exports grew by just 5.5% in dollar terms year-over-year in August, down from 7.2% in July. Export growth continues to trend down, with a rise of just 0.2% in RMB terms in the three months to August compared to the previous three months, significantly slower than the 4.8% jump at the p eak in January.

16 January 2017 Inflation and EZ Bond Yields Will Increase Gradually in 2017 (My Publications)

Inflation in the Eurozone jumped in December, and will surge further in Q1 as base effects from last year's crash in oil prices push energy inflation higher. Higher inflation in the U.S. and surging Chinese factory gate prices indicate that this isn't just a Eurozone story.

17 August 2017 China's Reform Scorecard Part Five: Monetary Policy Operation (My Publications)

Chinese monetary policymakers can rely on several different instruments to affect market and broad liquidity, ranging from various forms of open market operations to interest rates to FX intervention. The tool kit is constantly changing as the PBoC refines its operations.

18 July 2017 China is Slowing, not Rebounding. the Headline Data are Misleading (My Publications)

Chinese official headline data paint a picture of a strengthening economy in Q2. Our analysis shows a sharply contrasting picture. China's nominal GDP, real GDP and deflators are often internally inconsistent.

9 August 2017 Chinese Trade Growth to Continue Trending Down in the Second Half (My Publications)

The headline Chinese trade numbers are beginning to come into line with the story we have been telling about the more recent trends.

20 July 2017 Do we Need to be Afraid of Chinese Ghost Cities? (My Publications)

Stories of Chinese ghost cities are plentiful and alarming. The aggregate data present a startling picture. Between 2012 and 2015, China started around six billion square meters of residential floorspace but sold only around five billion.

20 June 2017 China Property is Slowing, Prices now Depend on Mortgage Rates (My Publications)

House price inflation in tier-one cities has been crushed by China's most recent monetary tightening. This is a sharp turnaround from the overheating mid-way through last year. Unlike in previous cycles, interest rates are probably more important for house prices than broad money growth.

2 Oct. 2015 Eurozone Manufacturing is Weak, and Will Likely Deteriorate in Q4 (My Publications)

Final PMI data in the Eurozone yesterday confirmed that manufacturing remains under pressure from global headwinds. The manufacturing PMI in the zone fell to 52.0 in September from 52.3 in August, in line with the initial estimate. A rare upside surprise in France was not enough to offset weakness in the other major economies, and the trend in private investment growth likely will stay subdued this year.

20 May. 2016 Chile's GDP Growth is Not Accelerating, Despite Strong Q1 (My Publications)

The Chilean economy improved in the first quarter, growing 2.0% year-over-year, up from 1.3% in the fourth quarter. Net trade led the improvement, with exports rising 2.1% quarter-on-quarter, thanks to the modest rise in metal prices and an increase in exports of services, especially tourism.

21 September 2017 Japanese GDP Supported by U.S. in Q3. Domestic Demand Weakening (My Publications)

Exports rebounded sharply in Q3 so far, after the Q2 weakness. This will be a useful boost to GDP growth in Q3, as domestic demand likely will soften.

22 September 2017 Angela Merkel will stay as Chancellor, but building a coalition will be tricky (My Publications)

Germans head to the polls on Sunday to elect representatives for the national parliament. The media has tried to keep investors on alert for a surprise, but polls indicate clearly that Angela Merkel will continue as Chancellor.

22 June 2017 Asian Exports Remain Sturdy in Q2, but the Outlook is Cloudy (My Publications)

Korea's preliminary export numbers rebounded quite spectacularly in June, with growth at 24.4% year-on-year, compared with just 3.4% in May. This reading is important as it comes early in the monthly data cycle. Korea's position close to the beginning of the global supply chain, moreover, means its exports often lead shifts in global trade.

21 June. 2016 All Aboard for a Recovery in German Inflation Pressures (My Publications)

Producer prices in Germany rose 0.4% month-to-month in May, stronger than the consensus expectation of a 0.3% gain, and we think further upside surprises are likely in coming months. The headline was boosted by a 0.7% jump in energy prices, but food and manufacturing goods prices also rose.

19 July 2017 China's Rolling Ball of Money: Out of Top-Tier Cities and into Tier three (My Publications)

China is a collection of hugely disparate provinces and cities. Managing all these cities with one interest rate is always difficult but in this cycle it is proving to be nearly impossible.

16 Mar. 2016 Can Yellen Reconcile Lower Dots, Rates on Hold and Rising Inflation? (My Publications)

The further improvement in labor market conditions and the jump in core inflation means that the economic data have given the Fed all the excuse it needs to raise rates today. But the chance of a hike is very small, not least because the fed funds future puts the odds of an action today at just 4%, and the Fed has proved itself very reluctant to surprise investors-- at least, in a bad way--in the past.

15 June 2017 China's Q2 Growth to Remain Sturdy but Expect a Slower H2 (My Publications)

China's industrial production grew at an annualised 7.2% rate by volume in Q1, according to our estimates, up from an average 5.9% rate in the six quar ters through mid-2016.

17 Mar. 2016 Will Consumer Demand for New Cars in the Eurozone Ever Slow? (My Publications)

Demand for new cars in the Eurozone bounced back strongly last month. Accelerating growth in the major economies lifted new registrations by 14.6% year-over-year in February, up from a 6.8% increase in January. Surging growth in Italy was a key driver, with new registrations jumping 27.3%, up from an already sizzling 17.4% in January.

18 April 2017 The Weather is Playing Tricks with EZ Industrial Production Data (My Publications)

As warned--see our Monitor April 7--economic data in the Eurozone disappointed while we were away. Industrial production, ex-construction, in the euro area slipped 0.3% month-to-month in February, and the January month-to-month gain was revised down by 0.6 percentage point to +0.3%.

18 August 2017 Japan's Trade Surplus Bounced. Exports to U.S. Strengthen (My Publications)

Japan's July adjusted trade surplus rebounded to ¥337.4B from ¥87.3B in June, far above consensus. On our seasonal adjustment, the rebound is slightly smaller but only because we saw less of a drop in June.

18 August 2017 Higher Core Inflation in the Eurozone Should be a No Brainer (My Publications)

Inflation data are known to defy economists' forecasts, but it should in principle b e straightforward to predict the cyclical path of EZ core inflation. It is the longest lagging indicator in the economy, and leading indicators currently signal that core inflation pressures are rising.

23 Mar. 2016 Welcome March Rebound in Eurozone Economic Survey Data (My Publications)

Economic sentiment data, which rebounded in March, continue to suggest slight downside risk to EZ GDP growth in Q1. The composite Eurozone PMI in March rose modestly to 53.7 from 53.0 in February, only partially erasing the weakness in recent months. The PMI dipped slightly over the quarter as a whole, although not enough to change the EZ GDP forecast in a statistically meaningful way.

24 Sept. 2015 PMIs Point to Stable and Strong Eurozone GDP Growth in Q3 (My Publications)

PMI data yesterday provided some relief to anxious investors, despite a modest drop in the headline. The composite PMI in the Eurozone fell to 53.9 in September from 54.3 in August, driven by slight falls in both manufacturing and services. Assuming no major changes to the advance September reading--usually a fair bet--the PMI rose marginally in Q3, pointing to a continuation of the cyclical recovery.

26 July 2017 China's Reform Scorecard Part 1: Labour Market and Demographics (My Publications)

Over the next 18 months we expect to see interest rates break out further on the upside. Initially, we expect developed market growth to be resilient to that.

5 July 2017 ISM Signals Continued Industrial Recovery, but not a Boom (My Publications)

The June ISM manufacturing index signalled clearly that the industrial recovery continues, with the headline number rising to its highest level since August 2014, propelled by rising orders and production. But the industrial economy is not booming and the upturn likely will lose a bit of momentum in the second half as the rebound in oil sector capex slows.

26 June 2017 Japan Surprises on the Upside as the Economy Accelerates into Q2 (My Publications)

Japanese data continue to come in strongly for the second quarter. The manufacturing PMI points to continued sturdy growth, despite the headline index dipping to 52.0 in June from 53.1 in May. The average for Q2 overall was 52.6, almost unchanged from Q1's 52.8, signalling that manufacturing output growth has maintained its recent rate of growth.

15 December 2016 EZ Manufacturing will Recover Quickly from its Poor Start to Q4 (My Publications)

Eurozone manufacturers had an underwhelming start to Q4. Data yesterday showed that production fell 0.1% month-to-month in October, pushing the year-over-year rate down to 0.6%, from a revised 1.3% in September. Output was constrained mostly by weakness in France and a big month-to-month fall in Ireland, which offset marginal gains in Germany and Spain.

27 July 2017 China's Reform Scorecard Part 2: Tax Revenues (My Publications)

In yesterday's Monitor, we outlined how the government's plans to allow more migrants to register in cities could help counterbalance the effects of aging and put a floor under medium-term property prices.

4 April 2017 Mexican Markets Had a Good Q1, the Next Test is on the Political Front (My Publications)

LatAm, particularly Mexico, has dealt with Donald Trump's presidency better than expected thus far. Indeed, the MXN rose 10.7% against the USD in Q1, the stock market has recovered after its initial post-Trump plunge, and risk metrics have eased significantly.

6 January 2017 Brazil's Industrial Recovery is Underway, but it is Painfully Slow (My Publications)

Yesterday's Brazilian industrial production data continue to tell a story of a slow business cycle upturn. Output rose 0.2% month-to-month in November, after a downwardly revised 1.2% plunge in October. The year-over-year rate, though, jumped to -1.1%, from -7.3% in October. The underlying trend is now on the mend, following weakness in Q3 and early Q4. Output rose in November three of the four major categories and in 13 of the 24 sectors.

7 July 2017 China's Authorities Losing the Regulatory Arbitrage Game (My Publications)

All regulators face the challenge that when you regulate one part of the economy, problems appear somewhere else. For China, the game is particularly intense because liquidity created by previous debt binges continues to slosh around the financial system, with no outlet to the real economy.

25 Jan. 2016 PMIs Point to Stable GDP Growth, Despite Disappointing Dip (My Publications)

Advance PMI data indicate a slow start to the first quarter for the Eurozone economy. The composite index fell to 53.5 in January from 54.3 in December, due to weakness in both services and manufacturing. The correlation between month-to-month changes in the PMI and MSCI EU ex-UK is a decent 0.4, and we can't rule out the ide a that the horrible equity market performance has dented sentiment. The sudden swoon in markets, however, has also led to fears of an imminent recession. But it would be a major overreaction to extrapolate three weeks' worth of price action in equities to the real economy.

9 September. 2016 The ECB Underwhelms, But QE Extension is Likely in December (My Publications)

Yesterday's ECB policy decision was a carbon copy of the announcement in July. The central bank maintained its key refinancing rate at 0.00%, and also kept its deposit and marginal lending facility rates unchanged at -0.4% and 0.25% respectively. The ECB also kept the pace of QE unchanged at €80B per month. Finally, the central bank refrained from formally extending QE.

8 September 2017 China Probably is Content with its Modest "Safe-haven" Role, for now (My Publications)

Geopolitical tensions have risen sharply for Asia in the last few months, yet the RMB has appreciated sharply. China's currency appears to be playing some kind of safe haven role.

7 September 2017 Japanese Regular Wages Breaking out of a 20-year Stagnation? (My Publications)

Japanese labour cash earnings data threw analysts another curveball in July, falling 0.3% year-over-year. At the same time, June earnings are now said to have risen by 0.4%, compared with a fall of 0.4% in the initial print.

25 May 2017 Is it Time to Tell a Less Upbeat Story on the Eurozone Consumer? (My Publications)

Markets cheered soaring business surveys in the Eurozone earlier this week, and recent consumer sentiment data also have been cause for celebration. The advance GfK consumer confidence index in Germany rose to a record high of 10.4 in June, from 10.2 in May.

3 July 2017 China's Industrial Complex still Strong in Q2, H2 in Draghi's Hands (My Publications)

We expect China's quarterly real GDP growth in the second quarter to edge down from Q1, but only because Q1 growth was unsustainable. The official data shows real GDP growth at 1.3% quarter-onquarter in Q1.

05 Feb. 2016 Bonds Signal an Imminent EZ Recession, but Don't Take the Bait (My Publications)

Strong real M1 growth suggests the cyclical recovery is in good shape. But recent economic data indicate GDP growth slowed in Q4, and survey evidence deteriorated in January. This slightly downbeat message, however, is a far cry from the horror story told by financial markets. The recent collapse in stock-to-bond returns extends the decline which began in Q2 last year, signalling the Eurozone is on the brink of recession.

10 Dec. 2015 Oil Prices to Play Tricks with German Net Exports Again in Q4? (My Publications)

German exports had a sluggish start to the fourth quarter, falling 1.2% month-to-month in October. The monthly drop pushed the year-over-year rate down to 3.0% from 4.2% in September, well down from the 5.6% third quarter average and extending the loss of momentum in recent months. Imports fell 3.6%, so net exports rose, but it's too early to make any useful estimates of net trade in the fourth quarter as a whole.

10 July 2017 PBoC and BoJ Choose Divergent Paths in the Second Half (My Publications)

The two major central banks of Asia have chosen hugely divergent policies. The BoJ has chosen to fix interest rates, while the PBoC appears set on preventing a meaningful depreciation of the currency.

11 August 2017 Commodities Driving Japan's PPI, a Weaker Yen is Needed to Lift CPI (My Publications)

Japanese PPI inflation rose sharply to 2.6% in July from 2.2% in June, well above the consensus for a modest rise.

05 October. 2016 Weakness in Brazil Industrial Production will be Temporary (My Publications)

The outlook for Brazil's industrial economy is better than at any time since before the crisis. But data released this week highlighted that the recovery will be slow and bumpy.

15 August 2017 China's Boomlet Causes Volatility for Japan, Second Half to Weaken (My Publications)

Japanese real Q2 GDP growth surprised analysts, increasing sharply to a quarterly annualised rate of 4.0%, up from 1.0% in Q1 and much higher than the consensus, 2.5%. But its no coincidence that the jump in Japanese growth follows strong growth in China in Q1.

01 Mar. 2016 Worst is Over for Manufacturers, but no Real Rebound Yet (My Publications)

The worst is over for manufacturers, we think. The three major forces depressing activity in the sector last year--namely, the strong dollar, the slowdown in China, and the collapse in capital spending in the oil sector--will be much less powerful this year.

02 Feb. 2016 First Quarter Consumption Will be Better - Weather Effects Will Help (My Publications)

The upward revisions to real consumers' spending in the fourth quarter, coupled with the likelihood of a hefty rebound in spending on utility energy services, means first quarter spending ought to rise at a faster pace than the 2.2% fourth quarter gain. Spending on utilities was hugely depressed in November and December by the extended spell of much warmer-than-usual weather.

11 May 2017 Core PPI Inflation is set to Rise Further, CPI Components to Follow? (My Publications)

Today brings the April PPI data, which likely will show core inflation creeping higher, with upward pressure in both good and services. The upside risk in the goods component is clear enough, as our first chart shows.

03 Feb. 2016 Would a Renminbi Depreciation Derail the Pick-up in U.K. Inflation? (My Publications)

Investors are increasingly anxious that an intentional sharp devaluation of the renminbi, aiming to combat China's slowdown, might lead to prolonged deflation in the West, particularly in an economy as open as the U.K.

14 August 2017 China's Slowdown Surprised Japan, Inventories to Boost Q2 GDP (My Publications)

Japanese domestic demand probably strengthened in Q2, with both private consumption and fixed investment accelerating. Trade and inventories are the key swing components for GDP growth.

14 Mar. 2016 Peru Hold Rates, But Tightening Cycle Hasn't Ended Just Yet (My Publications)

Peru's central bank, the BCRP, kept borrowing costs at 3.25% last week, surprising the consensus forecast for a 25bp increase. This was an unexpected move because inflation risks have not abated much since the previous meeting, when policymakers lifted rates for the third straight month.

14 September Weak Wage Figures Point to a Less Hawkish MPC than Markets Expect (My Publications)

Investors anticipate a shift up in the MPC's hawkish rhetoric today. After August's consumer price figures showed CPI inflation rising to 2.9%--0.2 percentage points above the Committee's forecast--the market implied probabilities of a rate hike by the November and February meetings jumped to 35% and 60%, respectively, from 20% and 40%.

12 Jan. 2016 Stable Eurozone GDP Growth and Higher Inflation in 2016? (My Publications)

The recent cyclical upturn in the EZ began in the first quarter of 2013. GDP growth has accelerated almost uninterruptedly for the last two years to 1.5% year-over-year in Q3, despite the Greek debt crisis and slower growth in emerging markets. Overall we think the recovery will continue with full-year GDP growth of about 1.6%. But we also think the business cycle is maturing, characterised by stable GDP growth and higher inflation, and we see the economy slowing next year.

13 September 2017 Korean Borrowing Begins to Recover, but the Fed isn't Done yet (My Publications)

Korean credit markets have begun tentatively to recover after the rise in global interest rates at the end of last year.

12 May 2017 Falling Inflation in Brazil Signals Rapid Rate Cuts Ahead (My Publications)

Brazil's April CPI data this week showed that inflation pressures remain weak, supporting the BCB's focus on the downside risks to economic activity. Wednesday's report revealed that the benchmark IPCA inflation index rose 0.1% unadjusted month-to-month in April, marginally below market expectations.

13 December 2016 Q4 Outlook is Brightening for the EZ Economy (My Publications)

One of the main conclusions we drew from last week's ECB meeting was that the QE program is here to stay for a while. If the economy improves, the central bank could reduce the pace of purchases further. But we struggle to come up with a forecast for growth and inflation next year that would allow the ECB to signal that QE is coming to an end.

25 July 2017 Korean Q2 GDP Growth to Provide Evidence of Chinese Slowdown (My Publications)

After strong real GDP growth in Q1, China commentators called the peak, claiming that growth would slow for the rest of 2017.

1 August 2017 Chinese Second Half Looking Increasingly Stagflationary (My Publications)

China's official manufacturing PMI, published on Monday, implies the industrial complex has maintained momentum going into Q3. The official manufacturing PMI moderated slightly to 51.4 in July from 51.7 in June. The July reading was unchanged from the average in Q2 and only modestly down from the 51.6 in Q1.

6 September 2017 Chinese Service PMI Still Stable but Glosses Over Subsector Divergence (My Publications)

The services sector in China is notoriously difficult to track, with the major aggregate statistics published only on a quarterly or even annual basis.

13 June 2017 The Eurozone and Asia's Big Economies are Joined at the Hip (My Publications)

In her inaugural Monitor, our Chief Asia Economist Freya Beamish plots three scenarios for the Chinese economy. The best-case scenario is that China makes a smooth transition to consumer-led growth.

12 Nov. 2015 US Fed is Set to Hike in December, A Worry For LatAm But not a Crisis (My Publications)

LatAm economies this year have faced a tough external environment of subdued commodity prices, weaker Chinese growth, the rising USD, and the impending Fed lift-off. At the domestic level, lower public spending, low confidence, and economic policy reform have clashed with above-target inflation, which has prevented central bankers from loosening monetary policy in order to mitigate the external and domestic headwinds. In these challenging circumstances, LatAm growth generally continues to disappoint, though performance is mixed.

11 Apr. 2016 Stronger Growth and Accelerating Wages Will Shift Rate Sentiment (My Publications)

A reader sent us last week a series of five simple feedback loops, all of which ended with the Fed remaining "cautious". For example, in a scenario in which the dollar strengthens--perhaps because of stronger U.S. economic data--markets see an increased risk of a Chinese devaluation, which then pummels EM assets, making the Fed nervous about global growth risks to the domestic economy.

*Sept. 2015 - Eurozone Economic Chartbook* (My Publications)

Ignore the Chinese deflation panic......The cyclical recovery is on track, and inflation is rising

21 Sept. 2015 Fed Delays Interest Rate Liftoff - LatAm Breathes a Sigh Of Relief (My Publications)

The Fed deferred, but did not cancel, the start of its rate normalization last week. As a consequence, December is now the most likely meeting for the first hike. The Fed's core view of the U.S. economy remains the same, but policymakers want a bit more time to see how global developments affect the U.S. Our Chief Economist, Ian Shepherdson, expects the strength of the employment data, better Chinese numbers and calm financial markets to prevent any further postponement beyond Q4.

25 September 2017 China Downgraded but Risk of a Default is Slim, China is a Saver (My Publications)

S&P downgraded Chinese government debt last week to A+ from AA- yesterday, following a Moody's downgrade last May.

9 July. 2015 Steep Wall of Worry in EZ Equities, But Macro Indicators Say "Buy" (My Publications)

Bond market volatility and political turmoil in Greece have been the key drivers of an abysmal second quarter for Eurozone equities. Recent panic in Chinese markets has further increased the pressure, adding to the wall of worry for investors. A correction in stocks is not alarming, though, following the surge in Q1 from the lows in October. The total return-- year-to-date in euros--for the benchmark MSCI EU ex-UK index remains a respectable 11.4%.

24 August. 2015 U.S and U.K. Demand, Not China, Drives the Eurozone Trade Surplus (My Publications)

The sell-off in risky assets intensified while we were away, driven by China's decision to loosen its grip on the currency, and looming rate hikes in the U.S. The Chinese move partly shows, we think, the PBoC is uncomfortable pegging to a strengthening dollar amid the unwinding investment boom and weakness in manufacturing.

29 July. 2015 Is EM Weakness Threatening Investment Recovery in the EZ? (My Publications)

Volatility in commodities and emerging markets has intensified since the beginning of July, with the stock market drama in China taking centre stage. The bubble in Chinese equities inflated without much ado elsewhere, and can probably deflate in isolation too. But the accelerating economic slowdown in EM is becoming an issue for policy makers in the Eurozone.

28 Apr. 2016 Global Risks Gone, but the Fed is Still Relaxed About Inflation Risk (My Publications)

The disappearance from the FOMC statement of any reference to global risks, which first appeared back in September, was both surprising and, in the context of this cautious Fed, quite bold. After all, one bad month in global markets or a reversal of the jump in the latest Chinese PMI surveys presumably would force the Fed quickly to reinstate the global get-out clause. So, why drop it now?

Freya Beamish

Freya Beamish produces the Asia service at Pantheon. She has several years of experience in covering the global economy, with a particular focus on China, Japan and Korea. Previously, she worked at Lombard Street Research (now TS Lombard), where she delivered research on Asia and the Global economy for over five years, latterly as the manager of the Macroeconomics group.

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