China Update: July manufacturing PMI slid back into contraction
China’s official NBS manufacturing PMI released on Sunday July 31 surprised to the downside and declined to 49.0, back to the contractionary territory (vs consensus: 50.3; June: 50.2). The manufacturing output sub-index and manufacturing new order sub-index were both in contraction, coming at 49.8 and 48.5 respectively. Exports new orders sub-index fell 2.1 points to 47.4.
What if the markets are underestimating the Fed’s path of this tightening cycle
The market is pricing in rate cuts from the Fed in first half of 2023. What if inflation fails to come down sufficiently to allow the Fed to pivot and cut rates? The 3-month SOFR futures may fall when rate cut expectations wane.
China Update: Homebuyers refusing to repay mortgages of uncompleted housing projects heightened risks in China’s troubled property sector
In the past two weeks, a large number of presale homebuyers of uncompleted projects across China collectively informed their banks of unilateral suspension of mortgage repayments until the resumption of construction of the relevant projects. Their actions have drawn much market attention to the still dire situation of the Chinese property sector and speculation on the health of the Chinese banking system.