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China: September manufacturing PMI shows that a stabilisation is more likely than a hard landing

The September manufacturing PMI in China rose to 51.2 from 50.9 in August and 50.7 in July, above market expectations (51.1). This reading was positively distorted with September being the eve of the national holidays. Therefore, the data can hardly be taken to suggest that the Chinese economy is accelerating. However, even if we do […]

Trapped between hopes of resolving the debt crisis and an economic slowdown

We have been pursuing an ever more defensive approach to investments in our portfolios since late spring this year, expressed in our steadily increasing exposure to US Treasury bonds and German Bunds. Yields on these benchmark government bonds had sunk from around 3.3% in late spring to about 1.7% by end-September. Such rock-bottom levels for […]

United States: Q3 modest reacceleration confirmed in consumption growth

Nominal personal consumption expenditure rose by 0.2% m-o-m in August 2011, in line with consensus expectations. However, July’s strong m-o-m figure was revised down from +0.8% to +0.7% and June’s reading from -0.1% to -0.2% m-o-m. In real terms, consumer spending was flat m-o-m in August, following +0.4% in July (revised down from +0.5%). As […]

United States: The Fed launches “Operation Twist”

As widely expected, the FOMC announced that it will sell short-term securities held in its portfolio to purchase longer-term securities. This action contributed to lower long-term rates. However, it is likely to support economic growth only very modestly. With GDP growth likely to continue to prove lacklustre, more monetary easing measures are likely, but probably […]

United States: Net new credit positive for the third quarter in a row in Q2 2011

Encouragingly, overall credit to the nonfinancial private sector increased further in the second quarter ($351bn annualised) for the third quarter in a row (see chart). Moreover, the pace of lending was substantially higher than in Q1 (36bn). Net new credit to non-financial private sector: in USD bn, annualised However, while net new lending to the […]

United States: Manufacturing output has grown robustly so far in Q3

Manufacturing output grew by a solid 4.2% annualised between the Q2 and July-August, confirming the idea that output growth will show a noticeable improvement in Q3. Industrial production rose by 0.2% m-o-m in August, above consensus estimates (+0.0%). July’s reading was not revised (+0.9%) but June’s number was revised down from +0.4% to +0.1%. Industrial […]

Gold: Safe haven needs intensified by SNB’s decision to weaken the CHF

Year-to-date, the price of gold has risen by 29% in US dollars. Measured in euros, the metal has risen by 26.2%, while in Swiss francs, the price is up by 21%. In comparison, commodity prices, as measured by the GSCI spot commodity index, have decreased by 3.6% over the same period. Performance of selected asset […]

The SNB sets a maximum value for the franc

This morning, the Swiss National Bank (SNB) set a minimum exchange rate at CHF 1.20 per euro, the latest measure to prevent the strengthening of the Swiss currency. It should be noted that the SNB is not pegging the franc to the euro; it is merely setting a threshold the Swiss franc should not exceed. […]

Euro survival threatened by the economic downturn

The second release of the PMI survey for August confirmed the sharp deterioration in economic sentiment. In particular, manufacturing sentiment led the movement with a fall into contraction territory in August (49.0). PMI services resisted, edging only slightly lower from 51.6 to 51.5. Nevertheless, the overall index fell to 50.7 from 51.2 in July. While […]

United States: weak employment report in August

Non-farm payroll employment was unchanged m-o-m in August, below consensus expectations of an increase of 68,000. Moreover, July was revised down (from +117,000 to +85,000) as were the numbers for June (from 46,000 to 20,000). Net revisions thus cumulated to a negative 58,000.   The unemployment rate remained unchanged at 9.1% in August, in line […]

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