China: The PBoC injected a sizeable amount of liquidity into the banking system on Tuesday.
Global investors noticed the PBoC’s action, pushing US equity futures higher (chart below). Hopes for a US-China interim trade deal also helped stocks around the world (see story from China’s state-owned publication).
The Eurozone: The ECB will be running out of government bonds to buy in this next phase of QE . Will the central bank boost purchases of ABS and corporate bonds? Quantitative Easing means large purchases of publicly traded bonds from banks and specific dealers in order to increase the money supply. Asset-Backed Securities are securities that can be “bond-like” where the security’s payments are derived from the income stream from a certain asset, example would be a collection of credit card debts and repayments backing the security’s payments to ABS holders.
The United States: Fed districts with higher China exposure have been reporting weaker manufacturing activity.
In addition, the unwind of inventories will be a drag on growth.
Emerging Markets: Industrial production growth across EM economies has been slowing.
Commodities: Fitch expects further downside for iron ore prices.
But Fitch’s 2020 price forecast for iron ore is still above consensus. Here are their projections for other commodities.
Currently, iron ore is still trading below resistance.
Food for Thought: Violent crime vs. air pollution:
Edited by Devon Lall
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