Macro-News round-up:

#MarketNews

  • U.S. business activity steady in November – S&P Global survey – According to the S&P Global survey, business activity in the U.S. has remained steady in November. Friday’s data had Positive reading of S&P global PMI. US PMIs: Manufacturing weak <50 – and worse than expected. However, services PMIs hold up and come out better than expected >50.
  • India to remain fastest-growing major economy but demand uneven: Reuters poll – The economy of India is anticipated to continue to be the fastest-growing among major economies despite uneven demand due to the rising interest rates and inflation.
  • Today: China’s industrial profits growth slows, keeping stimulus calls alive. The growth of industrial profits in China has slowed down, which may lead to increased calls for more stimulus measures. For the first 10 months of 2023, profits slid 7.8% from a year earlier, narrowing from a 9% decline in the first nine months, data from the National Bureau of Statistics (NBS). The sharp slowdown of year-on-year profit growth was partly driven by a rebound in energy prices. The central bank governor earlier this month said: “transforming the economic growth mode is more important than pursuing a high growth rate,” suggesting an urgent need for longer-term structural reforms as investment-led growth loses steam.
  • New cause for concern in the Chinese financial sector. Chinese authorities have initiated criminal investigations into the money management business of Zhongzhi Enterprise Group Co. following the revelation of a $36.4 billion shortfall in its balance sheet. This situation is reminiscent of the case of China Evergrande Group’s chairman. Zhongzhi, a privately owned wealth manager, disclosed its severe insolvency and liquidity issues, with expectations of low recoverable amounts from asset disposals. The group’s financial troubles began when one of its trust-company affiliates failed to make payments to customers on high-yield investment products. These developments add to President Xi Jinping’s challenges as officials grapple with a property crisis and a weak economy.
  • Japan: The corporate service inflation in Japan has increased, indicating broader price pressures. 
  • Bank of England should look more at money supply, lawmakers say – According to lawmakers, the Bank of England should pay more attention to the money supply when formulating their policies. they also said that witnesses reported “a lack of intellectual diversity” at central banks which at the BoE led to an “over-reliance on inadequate forecasting models” and “a unanimity of view … about the ‘transitory’ nature of above-target inflation” in 2020 and 2021.
  • Argentina’s Milei, IMF discuss fiscal adjustment plan, monetary program – In Argentina, newly elected Milei and the IMF have discussed the country’s fiscal adjustment plan and monetary program. The country is currently facing inflation nearing 150%, a looming recession and net reserves seen at negative $10 billion. Argentina is tied up by a $44 billion loan program from the IMF that has veered off track.

    CONCLUSION: dollar weakness, US macro data continues to show a cooling of the economy, as expected by the Federal Reserve. equities remain strong thanks to this, as it is assumed that there will be no more rate hikes. however, bond yields have risen slightly again.

    Asian stock markets, meanwhile, have been subdued. China’s industrial profits are recovering, but more slowly than expected.

    In Europe, after two weeks of consecutive stock market rallies, driven by the aforementioned bad US data, they seem to be pausing at resistance. The euro has recovered ground against the dollar taking advantage of the weakness, EURUSD up to 1.0950 – 1.10.

 

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