Weekly Market Recap
Week in review
- U.S. Fed tapering bond purchases by US$15bn in November
- RBA ends yield curve control policy and 2024 rate hike guidance
- Unexpectedly the Bank of England keeps rates on hold
- Australia business and consumer confidence survey
- Australia labour market report
- U.S. CPI inflation
Thought of the week
China is one of the few remaining countries pursuing a zero-COVID- 19 policy. Many other nations have started to re-open as vaccination rates rise and they opt to ‘live with the virus’. By pursuing a strategy of elimination and economic restrictions this will weigh on the outlook for economic growth in China and potentially the world. Moreover, this could lengthen supply chain disruptions is manufacturing capacity in China slows as steps are taken to control further outbreaks. This weeks chart illustrates the divergence in manufacturing conditions, based on the business surveys, between China and the U.S. However, historically these series have moved together with a slight lag as momentum in China slowed eventually this impacted the U.S. There are mitigating factors this time with the strength of consumption in the U.S. and a generally better economic outlook in the coming quarters. However, the risk around China’s growth and impact on stretched supply chains is worth watching.
Will China drag on the world?
U.S. ISM and China PMI manufacturing surveys
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