The Country Garden news reinforced the notion that “recession risks in China are real,” explained Sevens Reports’ Tom Essaye. Click here to read the full article.
Concerns about China’s economy increased Monday after Country Garden Holdings Co. suspended trading in some offshore bonds, “reminding investors of Chinese property market volatility from years ago and reinforcing that recession risks in China are real,” Tom Essaye, founder and president of Sevens Report Research, said in a note. He also cited “downbeat trade data out of China” last week, with imports and exports both missing estimates.
Click here to read the full article.
What’s in Today’s Report:
U.S. equity futures are tracking global markets lower this morning amid more negative news flow out of China while Treasury yields continue to test to cycle highs with the 10-Year Note yield above 4.20%.
Multiple Chinese economic reports badly missed estimates overnight with Retail Sales notably rising just 2.5% vs. (E) 4.2% in July.
The bad data and renewed concerns about the property market prompted surprise rate cuts by the PBOC but the policy action was seen as underwhelming by investors and markets traded with a decisive risk-off tone overnight.
Looking into today’s session, the headlines out of China will continue to influence money flows, however there are several key U.S. economic reports to watch this morning including: Retail Sales (E: 0.4%), Empire State Manufacturing Index (E: -0.4), Import & Export Price (E: 0.2%, 0.1%), and the Housing Market Index (E: 56).
Markets continue to look for “Goldilocks” dynamics in the data, consistent with easing growth, a loosening labor market, and continued drop in inflation. Anything that contradicts those trends could further risk assets including stocks today.
There is also one Fed speaker today: Kashkari (11:00 a.m. ET) but it is doubtful he wavers from the Fed’s narrative and is unlikely to move markets.